N Brown is ill suited to point the finger at Aim

Forget Rachel Reeves’s budget and the threat of axing Aim exchange tax breaks. Some companies on the junior market can’t be bothered to wait for that. The latest? N Brown, the accident-prone online clothing retailer, controlled by the family of the Lib Dem peer Lord Alliance.
It’s being taken private, via a £191 million cash offer at 40p per share, by a vehicle led by his son Joshua Alliance. But not without a departing a crack at Aim. Given “N Brown’s current shareholder structure and very low trading liquidity, and the limited UK fund manager appetite for small cap consumer stocks”, it was “not benefiting” from its Aim quote, it said, but still had “to bear significant costs associated with its listing”.
Neither is the retailer the only Aim member to come to that view lately. In July the accountants UHY Hacker Young said 80 companies had quit the exchange over the past year, with numbers down to 772 versus 2007’s 1,694 peak. Meantime, fund managers are increasingly wary of buying into itsy-bitsy Aim companies that, much to the delight of journalists, have delivered some real corkers over the years.
Who can forget the “Gatwick Gusher”, starring the famous share ramper David Lenigas: the ex-boss of UK Oil & Gas, who rushed on to the BBC to announce ludicrously that he’d struck an even bigger oil find than the North Sea, just down the road from the Sussex airport? Or Rob Terry, the ex-chief of the “country club built on quicksand”, otherwise known as Quindell, who claimed to be buying shares when he was actually selling them? Or Luke Johnson’s Patisserie Holdings, whose home of double chocolate dream gateaux turned out to be a fraud-ridden, gooey nightmare?
Even so, N Brown blaming its woes on Aim is a bit much. It’s been a public company for more than 50 years. But it was only in November 2020 that, alongside a £100 million cash call at 57p, it even joined the junior exchange — stepping down from the main market. At the time, it hailed the joys of Aim: “designed for smaller companies”, with a “more flexible regulatory regime”.
Liquidity has long been an issue, with the family owning 53.4 per cent and Joshua amassing 6.6 per cent — even if things admittedly became tighter once Mike Ashley’s Frasers Group had built a 20.3 per cent stake. But who knows how things may have turned out if the business behind the JD Williams, Simply Be and Jacamo brands hadn’t kept up its last decade prowess at delivering bad news: everything from weather-related trading losses and missteps in plus-size togs to having to pay £50 million to settle a legal row with Allianz over the sale of historic insurance products, including PPI.
The upshot? Despite a £200,000 return to the black at last week’s half-year figures, the shares were down to 27p — before young Josh’s bid. And at least the family have done the decent thing and offered a 48.1 per cent premium: enough to get Ashley’s backing, the agreement of the independent directors and lift the shares 43 per cent to 38¾p.
The Alliance family may be right, too, that “N Brown is better able to achieve its growth potential as a private company”. Yet, it can’t simply blame London’s junior market for that. It needs to take aim far closer to home.
First, scrap the bankers’ bonus cap. Then, propose cutting the eight-year deferral period for awards to five for “senior managers”, with the more junior sort bagging their loot after four. The efforts of Prudential Regulation Authority chief Sam Woods to deliver his “new secondary competitiveness and growth objective” so far seems to be skewed to rewarding bankers.
True, the cap was a nonsense — as “counterproductive” as he says for prudential regulation, because it “encouraged higher base salaries which were harder to adjust in response to shocks”. Not that base pay will be coming down any time soon. Woods may be right, too, that the UK’s deferral rules had left it an “outlier”: potentially deterring big shots from working here, which may be “damaging for competitiveness”.
All the same, too short a bonus deferral period brings its own risks. Most banking scandals are years in the making. PPI policies were first sold in the 1970s, most between 1990 and 2010. But it wasn’t until this decade that years of misselling landed banks with a £50 billion bill. The Financial Conduct Authority’s inquiry into hidden commissions on motor finance goes back to 2007.
And most bank fines are for goofs years earlier. Take NatWest’s £265 million penalty in 2021 for a money-laundering screw-up, involving gold dealer Fowler Oldfield: a tale that included it accepting £700,000 cash deposited at a branch in bin liners. That went back to 2012. Yes, bonus clawbacks exist. But the risk with shorter deferral periods is that corner-cutting bankers have spent their bonus long before a scandal blows up. It can be more prudential to make them wait.
There’s a play about the run-up to Rachel Reeves’s budget: Waiting for God Knows What. And the delay is creating all kinds of rushed behaviour. The AJ Bell boss Michael Summersgill has seen “a noticeable change in both customer contributions to pensions and tax-free cash withdrawals”. First over fears that she’ll change the rules on allowing savers to take 25 per cent of their pensions tax free, up to a limit of £268,275. Then, with others paying more into their retirement pots, worried she’ll change pension tax relief on contributions.
The chancellor keeps saying stability is required for long-term investment. But there’s not much more long-term than people’s pensions. A Labour predecessor, Gordon Brown, drove home the dangers of a cack-handed raid.