Birmingham firm Martineau Johnson has become the first practice to take the role of a merchant bank in sponsoring the stock market launch of a venture capital trust (VCT).
Stock market listings usually need to be underwritten and this requires stockbrokers or merchant banks which guarantee to buy unsold shares at a minimum price.
But VCTs, which invest in unlisted or AIM-quoted companies using private investors money, cannot be underwritten, allowing Martineau Johnson to lend its own name as guarantor to the issue.
The firm also went beyond the role normally played by lawyers by bringing together the board of directors of the VCT, Foresight Technology, and the fund adviser, VCF Partners.
Martineau Johnson corporate partner Andrew Stilton said, “We've created our own client.”
The firm obtained accreditation as listing sponsor for the Stock Exchange three years ago but this is the first issue in which it has used the title.
Stilton said sponsoring VCTs could be a useful new source of revenue for firms. There will be continuing work for Martineau Johnson in advising Foresight directors on the legal framework under which they have been constituted and on the legal issues surrounding investing in companies.
Martineau Johnson corporate partner Roger Blears earlier this year helped devise an innovative VCT, called Enterprise, that was partly guaranteed so investors would get back part of their money, even if the companies that the trust bought into failed.
“That involvement has given us a lead in this sort of work which I think makes us market leaders,” said Stilton.
The Foresight Technology Trust is unique in that it will invest only in small-to-medium-sized high-tech companies with growth potential. Most venture capital in Europe is used in management buyouts rather than in helping companies develop.
