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In June AIM enjoyed its most fruitful month for new issues this year, which saw shrewd investment outfit Marwyn Capital bring another buy-and-build investment vehicle to market.

For those unfamiliar with Marwyn Capital, its favourite modus operandi is to back proven management in sectors undergoing regulatory or other change in recent years. It has launched numerous cash shells on to AIM that have become small-cap stars, including Concateno, Zetar, Silverdell, Melorio and Inspicio.

Now it sees opportunities for the taking at the fragmented smaller end of the building materials industry, where it believes consolidation strategies being pursued by larger players will result in the disposal of valuable, but non-core, assets. Controlling stakes, it believes, can be acquired by new shell company Marwyn Materials, brought to market by broker Collins Stewart.

All-star team
The management team earmarked for the job sees the resurfacing of Peter Tom, chairman of Leicester Tigers rugby club and founder of concrete manufacturer Aggregate Industries, as executive chairman. He adds his 50 years in the industry to the 20 accumulated by chief executive Simon Vivian, a former boss of construction group Mowlem. Adding their considerable grey matter are non-executive directors David Williams, the well-thought-of mover and shaker who chairs Marwyn, and its managing partner James Corsellis.

This all-star team has attracted a modest initial £13.6 million of new money, which will be used initially for working capital and potentially for acquiring minority stakes in quoted companies.

As opportunities arise, a first controlling stake in a business should come via a reverse takeover.

I would expect Marwyn Materials to create value like Marwyn’s previous AIM-traded vehicles. The aforementioned Zetar and Silverdell have successfully bought and built in the confectionary and asbestos-removal sectors respectively, with their share prices performing strongly before recent weakness. Inspicio was recently snaffled up by 3i at a healthy premium after pursuing a buy-and-build mission in the high-margin commodities testing space.

No more than a fortnight after its arrival, Marwyn Materials’ share price has risen to 17.5p, a 75 per cent premium to the issue price, valuing the business at £24 million already. This upwards momentum will have been helped by Williams himself, who has bought a million more shares at 15p, upping his stake to 8.1 per cent. Mr Tom will be especially grateful, as his 15.7 per cent stake has appreciated by £1.6 million to £3.7 million in a matter of days. Worth buying in.

A brighter picture
The relatively modest, but impressive in the current fundraising climate, monies raised for Marwyn Materials helped tip the balance of AIM IPO funds raised in June to more than £200 million. This represented the highest monthly total for 2008 so far and implies the new issues picture is starting to brighten. Marwyn Materials’ swift price rise was by no means the only move north, with the nine debutants of the month enjoying an average increase of almost 15 per cent.

Shares in Indus Gas, an explorer brought to market in a £25 million float, have already increased in value by a third, raising the group’s market value from £300 million to almost £400 million. Even ReThink, a small business operating in the out-of-favour recruitment space, has seen its share price edge up to 12.25p, 23 per cent above the 10p at which Smith & Williamson procured £800,000 from investors.

June also witnessed a number of emigrations to AIM from the Main Board, to reduce costs, including Johnson Service, IS Solutions and Metalrax.

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