As market participants hunt beyond large-cap equities for alpha generation, accessing small caps is becoming easier in some markets but harder in others.
New York-based independent full-service brokerage Enclave Capital has expanded the firm’s global securities platform for US investors. Partnering with the UK’s Peel Hunt and Egypt’s CI Capital, Enclave will offer direct access to the British mid- and small-cap equity market and active coverage of the Egyptian market. Peel Hunt is a fully independent UK-based broker with 24 analysts that cover 270 companies while CI Capital is the investment banking arm of CIB, the largest banking group in Egypt.
“We understand the closer we can get our investors to a country and its players, the better,” said Stephen Inglis, CEO, Enclave. “The key drivers are access, proximity and responsiveness. We are hand selecting partners in international markets that can deliver on each of these essential elements.”
As well as Britain and Egypt, Enclave offers coverage in Central Europe through Wood & Company, Turkey through ATA Invest, Africa through African Sunrise Partners, Sub-Saharan Africa through African Alliance and Indonesia through PT Bahana.
“There are substantial efficiencies – time and money – to gaining access to the US financial markets under our model,” said Scott Fauver, head of brokerage at Enclave. “The response to our approach has been very positive – evidenced in the quality of our most recent agreements – and the interest from US investors and fund managers.”
Market abuse fears
Meantime, Deutsche Börse has announced it will close its SME market, First Quotation Board, after market abuse last month.
First Quotation Board, in its current form, will be closed on 15 December 2012. The market currently has the lowest transparency requirements of Deutsche Börse markets and according to the exchange has “experienced suspected cases of market manipulation multiple times”.
From July, stricter rules will apply to the market’s entry standard for issuers and in future, access will always require a public offering and thus a prospectus. In addition, businesses must have existed as a company for at least two years and have share capital of €750,000, a par value of €1 per-share and a minimum free float of 10%.
“We are convinced that the new measures improve our transparency segments’ quality and ensure sustainable tradability with high liquidity. The stock exchange’s primary role is to make sure that German and international companies can raise capital efficiently and effectively”, said Alexander Höptner, director responsible for markets services at Deutsche Börse.
There are currently around 10,000 shares listed on the Quotation Board.