The unlisted securities market (USM) has now been in existence for five years. An earlier article described the origins of the market, its main features and its early development. This article makes use of the larger amount of information now available to assess the progress of the USM as a market place for trading the equity of small companies and as a vehicle for generating equity finance. Longer experience of the market also makes it possible to examine the type of company entering the USM as well as the involvement of different institutions in the process of bringing companies to the market. The main points are:
- By the end of September 1985, a total of 406 firms had entered the USM; of these, 45 had graduated to a full listing, and 37 had withdrawn for other reasons, leaving the shares of 324 firms being traded on the market. At that date, shares on the USM had a market value of £3.6 billion.
- A total of £1 billion has been raised so far on the USM, either on admission or by way of rights issues. About one quarter of this has flowed to existing shareholders, the remainder to the companies themselves.
- Published indices of USM share prices have risen significantly less than those of the fully listed market, but they may understate the overall performance of USM firms.
- The average market capitalisation of firms on the USM is about £11 million, although this figure conceals a wide range of company size. Oil companies are stiff the largest single group on the USM by market value, but their relative importance has declined as other activities have become better represented.
The unlisted securities market