PlusNet takes AIM at stock market
Updated PlusNet, the Sheffield, UK ISP, is joining AIM, London's junior stock market on 14 July. It is flogging 13,910,219 ordinary shares at 90p per share to institutions to raise £12.5m gross and it will have a market capitalisation of £25.1m.
The ISP gets to keep £2.2m (gross of expenses) for itself. The rest goes to Insight Enterprises, the US IT reseller, which sees its shareholding reduced to approximately 45 per cent. Ownership was a happy accident. Plusnet was set up in 1996 by a British reseller called Choice Peripherals, which was bought by Insight a couple of years later.
PlusNet aims to be a consolidator in the broadband ISP market, but a couple of million quid ain't exactly a big warchest. However, it now has an alternative currency to cash - shares - to offer acquisition targets. And management are no longer constrained by Insight, if they want to dash for growth.
Today's announcement is somewhat sketchy on financial details. For the year to 31 December 2003, PlusNet had revenues of £17.4m and operating profit of £1.8m. Last month it forecast sales of £29m for 2004 and doubled profits. As of 31 May, 2004, it had approx. 180,000 customers, of which 64,000 were broadband subscribers.
In a press release today, Insight said the investment in PlusNet will be "accounted for under the equity method until the company's ownership is less than 20%". Presumably, Insight will divest itself completely of Plusnet shares in due course. A UK ISP is hardly a core business, and the money will come in handy - its UK reselling operation is not exactly flourishing. But then again, according to Microscope, it may be willing to exit the UK entirely.
In January, the UK channel newspaper reported that Insight was taking informal soundings about the viability of a sale. Either the feedback wasn't so good, or it's had a rethink. ®