Investors Chronicle article Part 117 Jan 2025 08:50
Let's hope AK doesn't move us from AIM to Pisces
It has now been more than 520 market days since shares in the £345mn Savannah Energy (SAVE) last traded publicly. Aside from the odd block of stock changing hands off-market, regular punters have been locked out of one of Aim’s largest stocks by market capitalisation for 25 months and counting.
The suspension began in December 2022, when the group entered a share purchase agreement to acquire Petronas’ oil and gas business in South Sudan for $1.25bn. By August, that deal had fallen through, though Savannah is still pursuing an “alternative transaction”, despite a deteriorating situation in the landlocked country, exacerbated by the spillover from a hideous civil war in Sudan that has hampered Petronas’ ability to transport crude oil northward to the Red Sea.
Until Savannah walks away or publishes an admission document, this is shareholders’ lot. Ironically, this is for their own protection. Because there is insufficient available information about a possible deal, and its financial implications for the group, there is too much uncertainty for an orderly market.
“Fundamentally, Savannah remains unequivocally an ‘AND’ company, seeking to deliver strong performance both for the short AND long term across multiple fronts, and pursuing growth opportunities in both the hydrocarbon AND renewable energy sectors,” said CEO Andrew Knott in a recent update. Many investors will no doubt have wondered: 'can we have that AND trade the shares?'
Then again, events that prevent Savannah’s proper functioning as a listed company are a theme. Since their 2014 debut, the shares have seen multi-month suspensions on at least four occasions, as a series of complicated transactions have left them untradeable on 40 per cent of days since IPO.
While Savannah is an outlier even by the standards of the junior market, we may all soon need to get used to such opacity and illiquidity. The UK government, FCA in tow, is pushing ahead with its plans to launch a trading platform for the intermittent trading of shares in private companies. Tulip Siddiq, still a Treasury minister at the time of writing, says Pisces (aka the Private Intermittent Securities and Capital Exchange System) will be “a significant step forward” in capital markets reform.
In an echo of Savannah’s trading history, dealing in Pisces securities will be confined to what the regulator proposes will be ‘concentrated liquidity events’. But while Savannah will eventually be forced to outline the details of any deal, should it materialise, company disclosure on Pisces will be largely discretionary.
Judging by a few comments on Savannah Energy’s bulletin boards, the inability to trade (or to figure out what is happening) amid a stream of whiplash-inducing headlines can be a comfort to some. Investors in multi-year private equity funds, and the executives of hyper-scrutinised public companies, recognise the attraction.
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