Hermes Pacific Exits London AIM Market Amidst Share Value Concerns

Hermes Pacific (LON:HPAC), an investment firm listed on London's AIM market since 2013, has decided to exit the exchange. The firm has expressed concerns over the undervaluation of its shares, which have decreased from 147 pence on September 30, 2023, to 52 pence at the last close. The decision to delist is attributed to the belief that the company’s shares are not reflecting their true value. 

Shift in Investment Focus and Challenges 

In December 2022, Hermes Pacific refocused its investment strategy towards the property sector. However, the subsequent rise in interest rates has made property investments less appealing compared to holding cash. This shift has been accompanied by a realization that maintaining the AIM listing imposed significant constraints on the company’s operational flexibility. 

Impact of AIM Listing on Operations 

The company cited that the “management time and the legal and regulatory burden” of maintaining the AIM listing outweighed the benefits. This burden, coupled with the shift in investment focus, led the firm to conclude that delisting would result in substantial cost savings and improve operational efficiency. The company’s board assessed various options and determined that leaving AIM was in the best interest of its shareholders. 

Historical Context and Investment Strategy 

Hermes Pacific initially adopted an investment policy focused on the financial services sector in Southeast Asia when it became an investing company in 2012. Despite making a few small investments, the company struggled to find opportunities that met its investment criteria. Consequently, in December 2021, the firm changed its policy to emphasize property investments. A residential property was acquired in Westcliff-on-Sea in May 2022, but rising interest rates led to a halt in further property investments. 

Recent Trends in AIM Delistings 

Hermes Pacific’s exit is part of a broader trend of delistings from the AIM market. Research in April 2024 revealed that 76 companies had delisted from AIM since April 2023, marking a 62% increase from the 47 delistings in the previous year. This trend reflects the challenges faced by companies listed on the junior market, especially in the post-pandemic economic environment. 

Company Statement 

In a statement, a company spokesperson explained that the board's decision to delist was driven by the need to streamline operations and reduce costs. The focus now is on managing the company’s resources effectively in the context of a shifting investment landscape.