Investbx and Squire Sanders Hammonds sign up to new funding initiative

BIRMINGHAM’S online trading platform Investbx, together with law firm Squire Sanders Hammonds, has signed up to help deliver a new funding initiative aimed at helping SMEs across the West Midlands.

The online exchange, recently acquired from Advantage West Midlands in a £1 deal, will be working with fellow exchange Sharemark to offer firms access to capital from the retail investor community.

The move is the result of the Treasury implementing the doubled Prospectus Directive limit, which will give SMEs the opportunity to access funding of up to €5m ahead of the European commission deadline of July 1, 2012.

The new service is aimed at companies needing growth capital of between €500,000 to €5m. Sharemark, working with The Share Centre, will co-ordinate the entire fundraising package, from due diligence to the completion of the fundraising process.

However, in order to provide West Midlands SMEs with a full service, Sharemark has linked up with Investbx, which will be offering firms corporate advice, while legal advice will be provided by Squire Sanders Hammonds.

SMEs will also receive access to up to £10m of bank debt through Clydesdale Bank under the same due diligence process. Sharemark will provide the marketplace where investors can find company presentations and offer documents, while investing will take place through The Share Centre and a number of other third party brokers.
                                    
The scheme is designed to be as commercially competitive as possible. Companies bidding for help will enter a due diligence process which will result in an Admission Document.

Those successfully attracting their minimum threshold of money to be raised will then be charged a £99,000 admission fee with an additional 5% commission charge deducted from the total funds raised prior to transferring the balance of cash to the fund-raising company.

This means, a company raising £2m will face a total cost of just under £200,000 – less than one-third of the cost of similar equity fundraising on AIM.

Sue Summers, board director at Investbx, said: “We are delighted to be part of this significant initiative from Sharemark as it provides the opportunity for Investbx to continue its remit of connecting viable SMEs with equity finance.

“The Share Centre’s retail investor base provides access to substantial fund-raising and we look forward to assisting the scheme with our expertise.”

The move is a boost to the exchange just weeks after it lost one of the three companies – Early Equity – trading on it.

Sophie Douglas, manager of Sharemark, said: “We’re very pleased to be in a position where the services we provide can be used to create a cost effective solution for small business fundraising.”