After three years of bleak trading for the UK’s small and mid-cap markets, Cavendish – a bellwether for the sector – has struck a cautiously optimistic note.
The boutique investment bank, which advises dozens of AIM- and Main Market-listed companies, said it ended its latest financial year in profit, and hinted at early signs that investor interest may be returning.
That comes as money begins to trickle out of overvalued US tech stocks, following Donald Trump’s shock tariff barrage.
Cavendish noted tentative signs of a shift back into European and UK equities. If that trend holds, some of the capital may eventually reach the undervalued small and mid-cap sector — where the firm is well positioned to benefit.
But the outlook for AIM, in particular, remains fragile. The junior market has lost 36 per cent of its listed companies since 2018, with its total market value down 60 per cent from its 2021 peak. And the buyers keep circling.
According to a new report from Peel Hunt, UK small caps are being picked off quietly and steadily by opportunistic bidders. What’s left risks shrinking further.
Cavendish – a bellwether for the sector – has struck a cautiously optimistic note on the outlook for UK small caps
It’s been a bruising week for growth stocks more broadly. The AIM All-Share index dropped 6 per cent as investors took risk off the table in response to Trump’s new tariffs, which threaten a return to trade war conditions and raise recession fears. The FTSE 100, by contrast, fell 5 per cent, with blue-chips already having priced in much of the damage.
Among the biggest casualties (down 30 per cent) was Brighton Pier Group, which said it will quit AIM altogether. The company cited a punishing cocktail of rising wages, energy bills, interest rates, shifting consumer behaviour, and the looming National Insurance hike.
Celadon Pharmaceuticals, down 36 per cent, also plans to delist. And on Friday, Minoan Group collapsed 72 per cent after warning it could be forced to suspend trading early due to a cash crunch. The holiday and leisure developer has run out of money and says it won’t be able to complete its audit by the end of April – the deadline to stay listed.
A formal suspension is now expected from 1 May, though the company has warned it may need to act sooner to protect creditors. It is in talks with its main lender about a debt-for-equity swap.
Tech group CloudCoCo shed 43 per cent following full-year results. The company ended the year with £1 million in cash and has sold its IT services business. While it says the core operation is growing, it isn’t yet large enough to cover the costs of being listed.
Premier African Minerals, after a strong run, slipped 24 per cent as investors took profits.
There were, however, some bright spots.
Spirits maker Distil Group surged 77 per cent after Dr Graham Cooley, the former ITM Power boss, took a stake. Cooley, a well-known name in cleantech, also sits on the board of tech firm Gelion and chairs Light Science Technologies.
Sareum Holdings climbed 61 per cent, with modest share buying by executive chair Stephen Parker appearing to catch the market’s attention.
Car parts supplier Strip Tinning gained 29 per cent after landing a £600,000 order from a German Tier 1 automotive manufacturer.
Supporting Cavendish’s cautiously upbeat narrative, two new companies made their AIM debut this week: Switch Metals, which is developing tantalum projects in Côte d’Ivoire, and Quantum Base Holdings, which applies quantum science to anti-counterfeiting.
And a final one for the watchlist: Kromek. The radiation detection specialist banked a £20 million cheque in February from Siemens Healthineers under a multi-year deal. Despite this, its market value remains modest – a disconnect not lost on its broker Cavendish, which has a 26p price target, well above the current share price of 5.31p.
For all the breaking small- and mid-cap news go to www.proactiveinvestors.co.uk.
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