Housebuilder Abbey will cancel its listings on the main Irish and UK stock markets and transfer its shares to the smaller, developing markets in both jurisdictions.
The move was greeted with some surprise by market sources. Last night the shares closed down almost 3 per cent at €8.20, although dealers attributed this mainly to indications from Abbey that it would need to take more risks in future if it is to match previous growth.
The company said it would transfer its shares to the Alternative Investment Market (AIM) in London and the Developing Companies Market (DCM) in Dublin on November 16th.
Abbey chairman and chief executive Mr Charles Gallagher said the company believed moving to the AIM would allow it to tap into the UK's retail investor market. It would be the biggest housebuilding group on the AIM and one of the top 20 companies on the fast-growing market.
He said Abbey had been a small company with a listing on the London Stock Exchange. "We don't stand out on the London exchange," he said. "We have been a small company that hasn't attracted much attention."
Mr Gallagher said one advantage of the AIM was that companies did not have to seek shareholder approval before making acquisitions.
He said the market was becoming tougher and "you have to be fleet-footed". To maintain the kind of returns Abbey had been making to date "you have to take a bit of a risk".
Abbey faced a challenging period ahead, he added. Although returns in Britain and Ireland had been strong in recent years, the market would get tougher.
Mr Gallagher predicted the company would capitalise on the housing market in central Europe, especially in the Czech Republic, where it already has property, and possibly Hungary and Poland, where there would be a lot of housebuilding.
Market sources said they did not see the rationale for the Abbey move. "The AIM is not particularly followed by the institutions," said one source. "It sounds like some adviser roped them into it."
Another source said it was difficult to see where Abbey's growth was going to come from, adding that it had always been a fairly conservative company.
"I suspect it has more to do with internal issues," said a source, "taking on more risk or a change of shareholder."
Market sources said AIM's disclosure requirements were less rigorous than for the London Stock Exchange. However, Mr Gallagher said Abbey always provided detailed disclosure in line with stock exchange rules and this would not change.
Mr Gallagher said the company had consulted widely with US, British and Irish institutions before opting for AIM. "On balance, they are happy," he said.
Pre-tax profits for the year to April 30th were £60.2 million (€87 million) compared to £48.4 million in 2003.
