SEYMOUR PIERCE leads in offering worst AIM performers

The Times

5^th Feb 07

Nick Hasell, Banking Correspondent

Seymour Pierce has brought more underperforming companies to AIM over the past three years than any other City stockbroker, an analysis by The Times has shown.

The study, the first of its kind, reveals that £1,000 invested in every fundraising conducted by the firm between January 2004 and December 2006 — the boom period during which more than 1,300 companies joined London’s junior stock market — would on average now be worth just £799.

Over the same period, a £1,000 investment in the FTSE AIM all-share index would be worth, £1,260, up 26 per cent, The finding comes ahead of this month’s clampdown by the London Stock Exchange on nominated advisers (nomads), the firms that raise money on AIM, when the LSE will formally codify the standards that it expects from them. It also comes after a growing scandal surrounding Torex Retail, the AIM-listed software company at the centre of a Serious Fraud Office investigation.

Two weeks ago, John Thain, chief executive of the New York Stock Exchange, criticised AIM for a lack of stringent corporate governance requirements and said it needed to continue raising standards to avoid harming the City’s reputation.

Seymour Pierce is one of four stockbrokers whose AIM fundraisings have on average lost money for investors. The others are Bridgewell Securities, which last month ousted its chief executive after issuing two profit warnings following its own AIM flotation, Manchester-based WH Ireland, many of whose clients are in the natural resources sector, Corporate Synergy and Nomura Code Securities, a life sciences specialist.

Seymour Pierce owes much of its poor performance to Seymour Pierce Ellis (SPE), its Crawley-based private client broking business, which it sold in September to City Financial Associates for £4.65 million. However, even stripping out the effect of SPE, the firm’s average return would have been £1,038, which would put it in the bottom six of the 24 stockbrokers covered in the study.

Seymour Pierce has raised money for some of last year’s worst performers on AIM, including Smart Telecom, which fell 99 per cent, AeroBox, down 92 per cent, and Screen FX, down 91 per cent. A spokesman for the firm said: “Seymour Pierce Ellis was run as an entirely separate company and is no longer part of the group.”

The Times’s analysis shows that, contrary to popular belief in the City, Evolution Securities is not among the worst performers, having ranked 12th after producing a return of £1,143. Its showing is helped by Premier Research, up nearly sixfold since its December 2004 float. The fact that the study uses closing share prices from December 29, 2006 means that Torex, to which Evolution is joint broker, makes a positive contribution. Torex shares, which were suspended alongside its January 26 profit warning, were trading at a 23 per cent premium to their issue price at the time.

The best-performing broker is Vancouver’s Canaccord Capital, which has generated an average return of £1,954, aided by Imperial Energy, a Russian oil explorer whose shares are up 2,448 per cent since floating. The other top five stockbrokers are Investec Securities, Libertas Capital, Teather & Greenwood and Numis Securities. The 24 brokers covered by the survey — which is based on transactions defined by AIM as admission or readmission of shares — together raised about £12 billion for clients in the three years to December 2006