AIM shrugs off Brexit fears

Publications that covered this story include:The Daily Mail, City AM and The Scotsman, all 18 April 2017.
  • Number of de-listings has dropped
  • Number of companies joining has risen

The Alternative Investment Market (AIM) has shrugged off Brexit related fears with an improved performance in the last 12 months, according to our research.

The number of companies leaving AIM has dropped by 16% in the last 12 months, falling from 105 in 2015/16 to 88 in 2016/17*.

The number of companies joining AIM meanwhile has risen by 5% in the same period, from 38 to 40, whilst money raised in IPOs **on the junior market has jumped from £753 million to over £919 million.

We state that the market’s improved performance comes despite fears of increased uncertainty amongst investors since the Brexit vote.

The strong performance of AIM since Brexit is partly down to its exposure to the global economy, as opposed to UK economy.

Laurence Sacker, managing partner of our London and Nottingham offices, explains “Trends such as commodity prices or growth in tech valuations is more of an influence on AIM than what is happening at the small companies end of the UK economy- that gives it protection from the worst of Brexit volatility.”

In terms of new IPOs, AIM’s improved performance is partly due to the fact that appetite among investors for growth investments has not been significantly diminished by Brexit.

We explain that a nascent recovery appears to be underway in the oil & gas sector, with nearly a quarter of new listings on AIM in the last 12 months coming from this sector.

Notable businesses joining and leaving the market in the last 12 months include:

  • Media and entertainment company Timeout Group which raised £90 million in its IPO in June;
  • Film studio Pinewood Plc which delisted in October pending takeover by PW Real Estate Fund III, run by the French property investor Leon Bressler; and
  • Cosmetic brand Warpaint London which raised £23 million in its IPO in November.

Laurence says “AIM’s performance highlights its resilience in the face of uncertainty.”

“The number of new listings, as well as the drop in the number of companies exiting AIM, shows London’s junior market is robust.”

“The market is still a way off its strong performance on capital raising of a few years ago – but it is clear that Brexit related fears have not caused any major setbacks for AIM.”

“The oil & gas sector has faced headwinds in the last few years, however the trend in new listings indicates that it is over the worst. Entrepreneurial oil & gas companies are benefiting from the asset sale programmes many of the major are undertaking.”

There is also relief that the worst fears over what the London Stock Exchange’s prospective merger with Deutsche Börse meant for the future of AIM have been put to bed.

Laurence continues “The end of the LSE Deutsche Börse deal lifts a cloud off the market as a whole, and AIM market participants can feel more secure in its future.”

“Future Brexit negotiations may have an impact on the market, but increasing the number of overseas IPOs on AIM will soften that.”

Number of companies exiting AIM drops from 105 to 88

Number of companies joining AIM rises from 38 to 40

*Year end 31 March 2017