Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Soaring AJ Bell to fly into FTSE 250 three months after IPO

Soaring AJ Bell to fly into FTSE 250 three months after IPO

AJ Bell is expected to enter the FTSE 250 in this week's quarterly index reshuffle, with shares in the online stockbroker having surged 82% since flotation in December. 

Having floated at 160p per share, giving a market capitalisation of £651 million, the shares have rallied to 295p, with the market cap now standing at nearly £1.2 billion.

Index provider FTSE Russell named AJ Bell as one of the likely additions to the FTSE 250 ahead of the reshuffle, which will be based on today's closing prices and announced after the market close tomorrow. The index changes will come into effect on 15 March.

A host of top UK small cap fund managers have snapped up the shares, according to Refintiv data.

They include Citywire AAA-rated Nick Williamson, manager of the Merian UK Smaller Companies fund, Harry Nimmo, Citywire AA-rated manager of Standard Life Investments UK Smaller Companies, and fellow AA-rated managers Anthony Cross and Julian Fosh, who run the Liontrust Special Situations and Liontrust UK Smaller Companies funds.

AJ Bell customers were also able to get in at the 160p flotation price, after the online stockbroker reserved a slice of the IPO for retail investors.

AJ Bell's surge has also provided a welcome boost to Mark Barnett, a longstanding backer of the company who held a stake prior to its flotation.

The shares' rise has catapulted his stake into the fourth largest position in his £3.4 billion Invesco Income fund, representing 3.3% of the portfolio. That was despite Invesco selling 42% of its stake in the business as part of the flotation. The fund group remains AJ Bell's largest shareholder, holding just over a quarter of the shares.

FTSE Russell named technology company Aveva and life insurer Phoenix as on the cusp of promotion to the FTSE 100.

Phoenix is the frontrunner for promotion, with a £5 billion market cap, boosted by its acquisition of Standard Life Aberdeen's insurance business last year.

Just Eat comeback

Another contender, although not named by FTSE Russell in its detailing of indicative changes based on Friday's closing prices, is Just Eat.

The online delivery firm's 4.1% rise since the start of the week has taken its market cap to £4.89 billion, just above Aveva's £4.88 billion. Shares in Aveva have dipped 1% since the start of the week.

Just Eat's promotion would mark a swift return to the blue-chip index after relegation in December last year.

After peaking at 890p in February last year, shares in Just Eat endured a heavy fall to 551p by December.

'The shares’ slide began when then chief executive Peter Plumb announced a plan to invest £50 million in delivery services, subsequently stepped up to £55 million to £60 million,' said Russ Mould, investment director at AJ Bell.

'That move was designed to improve customer service and combat other online platform rivals but investors took fright amid (unsubstantiated) talk that Uber Eats was looking to acquire Deliveroo, which itself raised its game with the launch of its Marketplace+ platform.'

While 2019 has brought more uncertainty with the departure of chief executive Peter Plumb, January's announcement that 2018 forecasts would be surpassed, and higher sales expectations for 2019, have helped drive the shares to 734p.

Wood Group faces drop

Wood Group is the prime contender for FTSE 100 relegation, with shares in the oil services company having fallen 29% since its promotion to blue-chip status at the end of September last year.

That coincided with a fall in the oil price, from around $85 a barrel in early October to $65 today.

'Wood Group’s latest stay in the FTSE seems destined to be as brief as its previous ones,' said Mould.

'Promotions in April 2008, March 2011 and September 2012 were swiftly followed by demotion in September 2008, September 2011 and September 2013.'

 Also at risk of relegation is gambling group GVC, with shares having tumbled 41% from August's high.

Contenders for promotion from the FTSE Small Cap index to the FTSE 250 include Kier, the Neil Woodford-backed construction company whose market cap has swelled to £827 million after a rights issue.

Pets at Home could also get the nod, after the 25% rally in shares of the pet supplies retailer since the turn of the year.

Analysts at Numis highlighted the potential investment trusts movers in the reshuffle.

'We expect Edinburgh Dragon to be relegated from the FTSE 250 to the FTSE Small Cap, after its tender offer,' they said.

‘We note that Law Debenture is close to promotion to the FTSE 250, and behind it a number of other investment companies – including NextEnergy Solar and Schroder Oriental Income – are next in the rankings for promotion to the FTSE 250.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Julian Fosh
Julian Fosh
14/165 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 40.7%
Anthony Cross
Anthony Cross
13/165 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 40.7%
Harry Nimmo
Harry Nimmo
12/55 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 54.47%
Nick Williamson
Nick Williamson
1/55 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 82.86%
Neil Woodford
Neil Woodford
91/91 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: -10.36%
Mark Barnett
Mark Barnett
88/91 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 4.45%
Your Business: Cover Star Club

Profile: how Brighton Capital joined Brewin and UBS alumni

Profile: how Brighton Capital joined Brewin and UBS alumni

‘I’m a mini business inside a mini business,’ says Sylvia Bowen, describing her new role at boutique Brighton Capital Management.

Wealth Manager on Twitter