Martley Capital and Challenger Bourse to Set Up Real Estate Stock Exchange

New platform aims to provide streamlined and cost effective process for issuers

12 Mar 2024 06:45 GMT  By David Hatcher

• What Martley Capital Group is launching a new real estate stock exchange
• Why To provide liquidity for potential issuers, teaming up with Aquis Exchange to access an established platform and regulatory set-up
• What next Launch expected in the second half of the year

Richard Croft’s Martley Capital is launching a new real estate exchange in conjunction with challenger exchange Aquis Exchange, React News can reveal.

Aquis, which trades £2bn of investments each day, is establishing a new real assets segment on its Aquis Growth Market bourse called Aquis Real Asset Market (Aram). Subject to regulatory approval, the exchange is expected to launch in the second half of the year.

Martley has in turn established Martley Capital Aram (Mcaram), which will provide specialist assistance to support the market, identify prospective IPOs and give advice to issuers in listing on it.

Open to listings for real estate owners, as well as to backers of infrastructure, land, forestry and credit secured against those asset classes, the exchange will focus on ensuring affordable costs and a streamlined process for issuers.

• Aram – how is it different to an IPSX?
• A Richard Croft-backed launch of a new real estate stock exchange will inevitably draw comparisons to IPSX – which he and his former firm M7 backed – with the exchange forced to begin winding down last year.
• Those behind Aram say it has several key advantages over IPSX, most notably with much of the expensive infrastructure already in place through Aquis. Aquis trades £2bn of assets a day and has seen 38 IPOs over the past two years – more than any other growth exchange.
• This gives connectivity through information service providers such as Bloomberg, through retail investment platforms such as AJ Bell and Hargreaves Lansdown, to IPO fundraising services, and to trading institutions such as banks and brokers.
• Crucially, more issuers are expected to be attracted, as it is expected that it will cost them around a third of the price of listing on IPSX – which was usually more than £1m.
• IPSX, which was also restricted to real estate rather than real assets and associated credit, was unable to advise issuers as an exchange in and of itself. Martley arm Mcaram will focus purely on finding and advising new issuers.
• More broadly, it is also hoped that falling inflation and interest rates could provide a more favourable IPO backdrop.

Independent cost comparison research estimates that Aquis listings have so far cost around 60% less than a London Stock Exchange main market listing. For investors, with Aram qualifying as an SME, trading in shares is exempt from UK stamp duty and holdings are inheritance tax exempt after two years.

The exchange is being launched in an attempt to capitalise on the broader technological trend of fractionalisation, which would enhance access to and trading within the real estate industry, which is a fundamentally illiquid asset class.

The founders hope to appeal to a range of real estate owners that are seeking to gain liquidity. Institutional fund managers, many of which are seeing outflows in part due to the maturity of defined benefit pension schemes, are expected to be one target group.

“I have been a long-term believer in the fractionalisation of real estate”

RICHARD CROFT, MARTLEY CAPITAL

The launch of Aram follows on from the failure of IPSX, which began winding down last September. Croft helped establish IPSX and invested in it alongside M7 Real Estate and its investors, where he was previously executive chairman before Martley’s carve-out at the end of 2023. Former IPSX shareholders are expected to become investors into the Aram exchange.

Martley now has around £720m of assets under management, with roughly 40 staff across five offices in the UK and central Europe.

More liquidity

Alasdair Haynes, chief executive at Aquis Exchange, said: “Who wouldn’t be excited about getting involved with the biggest asset class in the world? We are looking forward to working with Richard and the Martley team, utilising Aquis’ innovative technology and primary market expertise to enable investors to access commercial property and other real assets via the public markets.”

Croft added: “I have been a long-term believer in the fractionalisation of real estate and the need to create a more liquid way to invest in the world’s largest asset class. The opportunity to help establish the new segment of the Aquis market to address this need is a real opportunity for both Martley and myself.”

To read original article click here