Top 50: Floating into uncharted waters

Stock-market flotation is no longer the Holy Grail for private business, but as Glotel has discovered, it does have its benefits

EXTENSIVE PUBLICITY about investors' supposed lack of interest in the lower end of the stock market, culminating in the attention given to a spate of deals under which public companies have been bought out by private equity firms, has undoubtedly put many businesses off seeking listings. Even the Alternative Investment Market, set up four years ago with the aim of providing growing businesses with speedier and cheaper access to capital, has been suffering from a lack of liquidity in its members' shares.

But, although the general falling out of favour of "smaller-cap" companies means that a stock market flotation is perhaps not the ultimate accolade that it has generally been for ambitious businesses, it remains an effective way of raising the funds that are often necessary to remain on the growth trail.

Since the Independent on Sunday's annual survey of fast-growing private companies began in 1990, many of the businesses featured in it have joined the market. Among them are the pubs chain JD Wetherspoon and the transport group Stagecoach, both of which have continued to expand rapidly since becoming listed.

One of the latest to follow this path is Glotel, which - as its name suggests - is a specialist global provider of telecoms and networking consultants on a contract basis.

When it joined the market last month, the share placing was five times oversubscribed, with the stock going to a significant premium and still trading well above the 140p issue price.

But, while this is clearly pleasing to Les Clark and Andy Baker, the company's chairman and chief executive respectively, the important thing for them is that what they describe as "quite a gruelling process" has produced the funds they need to support future growth plans.

In nine-and-a-half years, the company had grown to a turnover of pounds 102m without seeking outside investment. But, according to Mr Clark, the company had become too big to be funded, as it was, through a combination of bank loans and confidential invoice discounting, a financing system that effectively enables a company to pay its bills out of future income.

Accordingly, the pounds 13.5m net raised by the float was used to clear Glotel's debt and provide the working capital necessary to help it exploit what he and Mr Baker see as the huge potential in their market.

The pair used to own the company 50:50, and still have 26 per cent each. "We want to build the business. We're not looking for an exit," says Mr Baker.

Indeed, he adds matter-of-factly: "The reason for the stock market is to raise money for companies." And while Mr Baker accepts that "the climate for smaller-cap companies is dire", he suggests that "a good company can get away in any conditions".

What has helped Glotel stand out is a clear focus on what it is doing. As Mr Baker stresses, its niche is telecommunications, and providing the people to staff an industry going through what is clearly an exciting period of growth. Even with 20 offices around the world - 11 of them in the United States - the company, based in London's Wardour Street, sees great scope for expansion.

But, for the moment at least, that growth is likely to follow the organic pattern of the past. Having been a high-flier in the Independent on Sunday's annual listing of fastest-growing private companies in the past, Glotel is confident on delivering on the plans announced to the City during the flotation process.

And, though Mr Clark and Mr Baker say that they are only now getting back to the business of focusing all their attention on the day-to-day operations after the distractions of going public, they clearly relish some aspects of their new higher profile.

"The best part for Les and I was the roadshow," says Mr Baker, while his long-time partner adds: "Talking about your company for two weeks solid is exactly what we like doing."