It’s been a busy month in small-cap land with good news, bad news and downright weird news for investors to digest.

First the good news, as the persistent undervaluation of UK companies – and small caps in particular – draws increasing numbers of corporate buyers.

Financial services software provider Gresham Technologies (GHT) agreed a 163p per share cash offer from funds managed or advised by STG Partners, valuing the firm’s equity at just under £150 million or a 27% premium to its market cap.

For investors in Gresham, including major stakeholder Kestrel Partners, the deal represents an opportunity to cash in at a premium, although anyone who bought the shares above the bid price will be forced to take a loss.

For STG, there is ‘an exciting opportunity to combine Gresham with its portfolio company, Alveo, which Bidco acquired in January 2023 with the aim of building a global and differentiated enterprise data management and governance platform for the capital markets tech ecosystem’.

ANOTHER TAKEOVER DEAL

‘Smart buildings’ and alternative energy group T Clarke (CTO) was another firm attracting a takeover approach, this time from existing shareholder and gas supplier Regent, at 160p per share, valuing it at roughly £90 million.

The directors argue the 28% premium gives minority investors a chance to ‘accelerate the crystallisation of a certain value from their investment’ at an attractive price given the shares have ‘consistently traded at a discounted multiple’ to those of their listed peers.

As with Gresham, however, anyone who bought the stock above 160p is crystallising a loss not a profit and won’t exactly be jumping with joy.

For Regent, the deal is aimed at bringing it a greater presence in more attractive markets with better growth prospects than gas services and metering.

While the M&A (mergers and acquisitions) market continues to bubble away as buyers take advantage of low valuations, at the other end of the market there is still a steady stream of companies opting to de-list and take themselves private.

Clinical-stage biotech firm REDX Pharma (REDX:AIM), which focuses on the discovery and development of novel, small-molecule, targeted medicines for the treatment of cancer and other diseases, proposed de-listing its shares and re-registering as a private company.

Despite some of the biggest AIM capital raises for a biotech company, REDX’s valuation is ‘not reflective of our track record or future potential and is not conducive to raising the level of capital required for our growing clinical portfolio,’ according to the directors.

Ironically, REDX was flagged by a national newspaper in February as potentially eyeing a US listing which might have improved its valuation.

THROWING IN THE TOWEL

Another AIM-quoted biotech firm throwing in the towel is e-Therapeutics (ETX:AIM), which has proposed canceling its London listing and is looking at floating on Nasdaq instead.

The firm has proposed raising around £29 million in new shares by tapping funds managed by M&G (MNG) and serial investor Richard Griffiths, who between them control close to half of the firm’s equity, as well as minority shareholders.

In a highly personal thread on X, formerly Twitter, chief executive Ahmad Mortazavi described the UK capital markets as not just illiquid but ‘completely broken and closed’.

Mortazavi went on to say the firm tried to raise funds earlier this year and ‘couldn’t even secure a serious meeting let alone have a shot at raising capital’.

The response from investors was ‘a blanket refusal to invest in an AIM company and that a private company would be far more attractive’.

AN ODD CHANGE OF STRATEGY

In terms of sheer oddness, we couldn’t not include Aquis-listed Clarify Pharma which announced it was no longer going to invest in psychedelic-led biotech and life sciences companies and would instead become ‘a provider of Filecoin stacking nodes’.

To fund this new strategy, the firm sold two of its investments in Nasdaq-listed businesses and has applied to Companies House to change its name to File Forge Technology, after which the ticker will change from PSYC to FILE.

Rather than back studies into LSD and MDMA as psychotherapy treatments, which some investors might already consider to be fairly out-there, the firm’s new mission is to build ‘an active and engaged community of investors that believe in the opportunity of the Filecoin ecosystem and want public market exposure to this growing market’.

For the uninitiated, Shares included, Filecoin is ‘a decentralised storage network that turns cloud storage into an algorithmic market. The market runs on a blockchain with a native protocol token (also called “Filecoin”), which miners earn by providing storage to clients,’ the firm helpfully explains.

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