The market maker who is taking on the bears

At the height of the dot.com boom, they had to wedge the doors open at the offices of Ofex, the market for unlisted shares. Its traders were deluged by calls from private punters turned swivel-eyed from too much time on internet bulletin boards, all chasing the latest wonderstock.

"It was absolutely manic in here," remembers John Jenkins, chairman of Ofex. "Four people were handling close on 7,000 phone calls a day, and they couldn't stay off the dealing desk. They didn't eat, they drank a lot of coffee and water, hence the doors had to be wedged open for the boys running up to the loo and running back again."

These days, the phone may not ring for hours. Ofex – which has always been at the Wild West of the investment map – looks far too illiquid and dangerous for short-term speculators. The market exists as a means of trading shares in companies that don't want to go to the trouble or expense of joining the London Stock Exchange or its market for growth companies, AIM. Ironically, Ofex itself is planning to float on AIM at the end of this month.

You might imagine Mr Jenkins, one of the City's enduring characters, rues not having floated Ofex as originally planned in late 2000. But no, he says. "We pulled it because a lot of businesses in our industry were being valued on what they had done that year. Quite honestly that boom had finished, and we would have a valuation based on that particular year – although it was very flattering – that was hardly likely to be achieved in 2001 or 2002. I thought it would be dishonest to sell it on the back of that, and I didn't want to spend the rest of my life apologising."

And you might imagine he would think it crazy to float it now, after the mauling of the bear market. But no, that is what he is doing, attempting to raise £1.7m in an initial public offering that will value Ofex at £4.5m. He is buying new shares in the IPO, not selling down his stake.

Mr Jenkins, a 56-year-old giant of a man, has been trading shares since he was 15 and has always operated on the fringes of acceptable investment. He learnt his trade as a jobber – the forerunner to today's market makers – at his father's firm, specialising in trading shares in newly-legal betting shop chains and racetracks. Ofex itself is home to some nascent business ventures and speculative outfits, as well as a host of football clubs including Arsenal and Rangers. The late Sidney Jenkins' taste for exotic investments lives on and his son is looking to make Ofex a place to trade the securitisations of property or industrial plant.

"We're not mainstream, never have been. If somebody has something odd and legitimate they want to securitise, we'd like to have a crack at it. This business is not boring." Sidney Jenkins' picture appears in shadow on the glossy front of the Ofex prospectus – "for good luck".

Mr Jenkins set up his own jobbing outfit, JP Jenkins, in 1991 and it created Ofex four years later. JP Jenkins made a market in the shares and enforced a light regime of rules and regulations on members, until Ofex was split away as a separate company, formally regulated by the Financial Services Authority, last year.

Although Mr Jenkins is remaining as chairman of Ofex, he insists it is in a non-executive capacity. He wants to concentrate on JP Jenkins, building it into a mini-investment bank. It has a lucrative niche introducing companies to Ofex and hopes, from the end of the year, to start fundraising on behalf of companies too. "We're pleased JP Jenkins has been separated because it can get a life of [its] own, whereas before we couldn't go into corporate broking. Before Ofex clients would have said, you're a corporate broker, market maker, trading platform and regulator. And people have always had this cynical view that JP Jenkins knew everything before everyone else – which was never true."

Some of the private punters who lost small fortunes on Ofex shares during the boom times still grumble about the spreads JP Jenkins market makers were offering on stocks, that is, the difference between the price at which they would buy shares and the price at which they would sell them. But Mr Jenkins says he was warning all throughout that "silly period" between November 1999 and March 2000 that bulletin board tips were dangerous, and that some Ofex companies manipulated them for their own ends. He also says some of the critics have an exaggerated view of how much he and his family made from the boom.

"People have this illusion that we're worth squillions. We don't run Ferraris, live in big houses, have villas abroad, have big lifestyles. The biggest action I get is going to try to learn to play bridge at the local Red Cross centre. I'm fortunate to have three cars, including a 17-year-old Mercedes and a rather nice Mercedes CLK which was a treat a few years ago." The CLK was an impulse buy – typical, he says. "My background is jobbing and market making and you have a fraction of a second to make a decision, so you deal in facts, short, sharp, 'buy or sell?'."

Even after Ofex floats at the end of the month, it is being kept largely in the family, with JP Jenkins as the largest shareholder and Mr Jenkins' offspring, Emma and Jonathan, as joint managing directors.

He bristles at criticism of the bizarre set-up and insists there is genuinely collegiate decision-making among the executives at Ofex. "People say I can't make up my mind which to favour, don't want to cause a family argument and certainly don't want to upset mother. Nothing to do with that at all. We could have had Emma as chief executive, Jonathan as something else, but if this is what it is, isn't it better to say this is what it is, rather than trying to dress it up as something else people are more comfortable with? Emma started Newstrack in 1993, which went on to become Ofex. Jonathan has built up our marketing and media. I feel so sorry for the kids that their name is Jenkins."

Despite having the City dynasty firmly established, and despite protestations that "that garden is starting to look interesting", it doesn't seem Mr Jenkins will be quitting the City soon. The bear market means hard graft is necessary to grow JP Jenkins, and more may still be required. "I promised my wife I would retire. She's had 42 years of me doing this. I promised her faithfully two years ago that my retirement date would be 31 December this year. The way the markets are, though, that's probably on hold." Then he glances at the tape recorder. "I shall get a kicking from my wife when she sees this."

JOHN JENKINS - JOBBING GIANT

Age: 56

Pay: A nominal £15,000 for non-executive chairmanship of Ofex.

Career: Joined father's jobbing firm, S Jenkins & Son, in 1962, aged 15. Senior partner, 1981. Group sold to Guinness Peat in 1986 and operations shut down in 1989. Set up JP Jenkins in 1991.

Interests: Travel, especially cruises