Weak pound means opportunity for AIM’s exporters
Cash rich private equity buyers are also circling
The pound is trading near its lowest level against the US dollar since 1985, a year which also saw Mikhail Gorbachev become the leader of the Soviet Union, Boris Becker become the youngest winner of the Wimbledon Men’s singles title and England win the Ashes.
The popular press is revelling in the current gloomy economic backdrop and while times are indeed challenging, notably from an energy and inflationary perspective, the UK’s weak currency could offer a terrific opportunity for UK exporters.
Thankfully there are plenty of these on AIM, with many having seen their share prices and valuations tumble over recent months, offering a compelling buying opportunity for patient investors, particularly with those with an eye on the Inheritance Tax planning benefits.
One of our long-term AIM portfolio holdings AB Dynamics has seen its shares fall substantially from 2021’s highs. With its headquarters in Bradford-on-Avon, near Bath, AB Dynamics is a manufacturer of advanced testing, simulation and measurement products for the global automotive sector – we covered this excellent company previously in a Blog here. AB Dynamics is a major beneficiary of the transition to electric vehicles, supporting nearly all the world’s car manufacturers. In 2021 over 90% of its revenue was derived from outside the UK, including 24% from North America and 50% from the Asia Pacific region. With its main manufacturing facilities in the UK, the weak pound could therefore be helpful to business.
AIM going cheap, especially for US buyers
The weak pound and tumbling share prices also make UK listed companies more appealing to overseas buyers and there have been several offers and recommended bids for UK Technology companies over the summer, including two on AIM.
This week brought news that GB Group, experts in digital location, identity verification and fraud software and one of our newer AIM portfolio holdings, is currently considering a possible cash offer from GTCR, a US-based private equity business.
Shares in GB Group hit a 5 year low in early July, despite not having had any operational issues and meeting the market’s expectations.
The share price of GB Group leaped in response to the latest news, but still remains well down on year highs, with many anticipating that rival bidders will emerge.
If share prices remain depressed, we anticipate that many other good quality UK listed AIM companies, will be snapped-up by cash rich overseas buyers.
As we commented in our previous Blog here, AIM’s well-established technology related companies, notably in the software arena, look particularly vulnerable to approaches, given their proven business models, cash generative attributes and largely debt-free balance sheets.
To find out more about the benefits of investing in AIM, please speak to our Business Development Manager Jonathan Bramall via email [email protected] or phone 01923 713 894
Our Webinar here covered many of the key questions clients ask when considering investing in AIM shares for Inheritance Tax Planning purposes. You can watch a recorded version of the webinar from the link here.
This video presentation here also provides a brief introduction to the Fundamental AIM IHT portfolio service.