Talking point: Floating an idea
The idea of reintroducing regional stock exchanges into the UK’s main cities is one which has been, if you will, floated for some time now.
Last month, the push for regional exchanges stepped up a gear when business secretary Vince Cable outlined the proposals in his Green Paper ‘Financing a Private Sector Recovery’.
While the stock exchange idea is just one included in the proposals, it is encouraging to see it so high on the agenda.
Investbx, the West Midlands’ online stock exchange fits the model which is being proposed nationally by Cable.
Investbx is the inaugural regional exchange of the 21st century and, as a result, people have been watching with interest to see how the idea has developed.
Born from attempts to bridge the acknowledged equity gap of between £500,000 and £2m, the regional exchange idea was discussed for several years at the turn of the decade before the West Midlands took the brave step of making the idea a reality.
In essence, Investbx acts as a catalyst, bringing together regional investors and successful companies with plans to expand and create jobs.
Since launching in 2007, Investbx has brought three regional companies to the market, giving them the opportunity to continue their expansion plans even against the backdrop of the recession, during which time deals of any kind were few and far between.
Take Key Technologies as an example. Using the £2m from its fund raising on Investbx, the specialist engineering company has been able to invest in new products, technology, productivity and efficiency improvements. As a result of this, the company has successfully continued to expand and grow its profits.
This clearly demonstrates just how the right combination of investors and ambitious companies can be brought together through the catalyst of regional exchanges.
While there will be much discussion and debate among the business community about how best to provide business finance – particularly in a climate where there is a bank lending gap. There are those who will argue that convincing private investors to part with their cash within the parameters of regional exchanges could be challenging in terms of liquidity particularly in the current economic climate.
In light of this the government’s attempts to consult with the business community on how these liquidity challenges can be overcome are encouraging.
As with anything completely innovative, there is no roadmap to success and the path is never straightforward. So, lessons need to be learned every step of the way, the things that work well and less well need to be taken on board and experience gained. Investbx has three years experience through what is best described as extreme market conditions.
It is clear that innovative ways of securing investment are necessary to help regional companies to grow and regional exchanges, such as Investbx, could offer a valuable route to achieving the goal we all share of rebalancing the UK economy and a platform for sustainable recovery.
Sue Summers, chief executive officer, Investbx
