Small cap movers: Arcadia’s high street empire turns to AIM rescuers to survive

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Arcadia’s high street empire looks likely to end up in the hands of two of AIM’s runaway retail success stories.


boohoo (LON:BOO) confirmed this week that it is in exclusive discussions with administrators Deloitte to buy the Dorothy Perkins, Wallis and Burton brands, days after it emerged that rival ASOS (LON:ASC) was the frontrunner to rescue Topshop, Topman, Miss Selfridge and HIIT.


boohoo is willing to pay around GBP25mln for a slice of the failed Philip Green empire, while ASOS may hand over GBP250mln, although it’s fighting a bidding war against fellow e-commerce giant Shein and potentially JD Sports (LON:JD.) after Next (LON:NXT) pulled out.


It is bad news for the UK high street because the two AIM firms are pure-play online retailers. So, brick and mortar stores are excluded from negotiations, mirroring boohoo’s recent GBP55mln deal to acquire the last vestiges of Debenhams.


Arcadia folded with an estimated GBP350mln pension black hole, and the potential loss of 13,000 jobs.


Turning to matters far less depressing – IPOs are back in fashion.


Doctor Martens, Deliveroo and Moonpig look set to break the UK log-jam – with some even bigger floats expected in the US imminently, including Bumble and DoorDash.


On AIM too there seems to be a revival of interest in new issues. Virgin Wines has reportedly hired an investment bank ahead of a GBP100mln stock market debut, while there are three listings scheduled for early February.


“The capital markets have been a fertile source of finance for businesses of all sizes over the last 12 months,” said Christopher Raggett, co-head of corporate finance at broker finnCap (LON:FCAP).


“We expect to see more IPOs in the early part of this year as entrepreneurs from businesses of all sizes take advantage of the ability to fuel their growth in a supportive environment.”


Turning to the wider market, the AIM All-Share dropped 2.9% to 1,160 this week. But it still outperformed the FTSE 100, which slid 3.6% to 6,449 as the Reddit rebellion roiled global markets.


Among the risers, Getech Group Plc (LON:GTC) soared 114% higher to 30p after entering two new partnerships with H2 Green and SGN Group that will see the software firm participating in the construction of a national network of hydrogen generation, storage and retail hubs.


In the pharma sector, genedrive PLC (LON:GDR) zoomed 71% higher to 71p after revealing its coronavirus (COVID-19) tests will be sold in the US and Europe by partner Beckman Coulter Life Sciences, which is creating a new sales channel in the American market for the diagnostics firm.


Jersey Oil and Gas PLC (LON:JOG) gushed 41% higher to 160p on the back of a significant uplift in contingent resources at the Buchan project in the North Sea, now expected to hold 126mln barrels of oil up from 82mln estimated previously.


Elsewhere, Nightcap PLC (LON:NGHT) climbed 37% to 18p after media coverage turned investors’ attention to the cocktail bars owner, which floated earlier this month via a GBP4mln IPO.


Moving on, Journeo PLC (LON:JNEO) headed 33% higher to 75p after it secured a one-year contract extension to provide CCTV and other information technology systems to First Bus UK.


Among the fallers, Asiamet Resources tumbled 39% to 2p after terminating a deal to sell its subsidiary Indokal, the owner of the BKM copper project in Indonesia, because buyer PT WIN was late with payments.


Meanwhile, insolvency litigation financing firm Manolete Partners Plc (LON:MANO) dived by 32% to 200p after admitting new case enquiries are expected to remain low because UK government financial support has helped several companies avoid insolvency since the start of the coronavirus pandemic.


However, solar panels producer Verditek PLC (LON:VDTK) plunged 28% to 4p after admitting the pandemic is hitting its potential to make more sales as customers are more cautious, with “minimal” revenues recognised in 2020.


Talking about weak trading, Real Good Food PLC (LON:RGD) lost 18% of its flavour to 3p on the back of a weak interim performance after the cake decorations maker was hit by the closure of restaurants and consumer outlets.


Finally, a supplier of advanced composite material kits Velocity Composites PLC (LON:VEL) slid 13% lower to 17p after its full-year loss before tax ballooned five-fold to GBP3mln due to the COVID-19 hit on its target markets, which include the aerospace sector.

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