Number of de-listings from AIM jumps 79% in one quarter

Publications that covered this story include the Independent, The Times, the Daily Telegraph and Financial Times, 8 July.

  • Number of companies leaving due to financial stress triples over last three months
  • Mirrors wider volatility on stock markets

25 companies left AIM in the last quarter, up from 14 in the first months in 2013 – the biggest number of de-listings in over a year, according to our research.

15 new companies listed on AIM in the last three months, the most new listings in a single quarter since 2011. However, recent market slides might hit future IPO activity.

While the market has been attracting more new listings, the number of companies quitting the market, particularly due to “financial stress and insolvency,” has increased.

Seven companies cited financial stress as a reason for leaving AIM in Q2 2013, up from only two in Q1 2013, and the highest number in a year. However, 10 of the 25 de-listings were down to M&A activity.

Laurence Sacker, Partner, says: “AIM appears to have taken a turn for the worse since the previous quarter, when AIM exits had been at the lowest point since the financial crisis.”

“While the number of new listings is up, this is outweighed by a substantial increase in the number of companies de-listing from the market, so the AIM market is shrinking again.”

“The fact that a substantial proportion of these de-listings is due to M&A is good news, however the sudden increase in the number of de-listings due to financial stress in particular is evidence of how much impact the prolonged recession has had on small caps.”

Laurence adds: “We’ve already seen the negative effect that talk of ending quantitative easing has had on equity markets. Many small cap companies will be hoping that this sort of economic stimulus is not switched off too soon.”

The volatility of the stock market in recent days may dampen IPO activity. In the last couple of weeks, several high profile floats – such as Guy Hand’s planned £850 million IPO of Deutsche Annington – have been halted due to adverse market conditions.

Number of companies de-listing from AIM and companies de-listing due to financial stress and insolvency (by quarter)

Quarter

Total number of de-listings

Total number of de-listings due to financial stress and insolvency

Q2 2012

20

9

Q3 2012

23

2

Q4 2012

22

5

Q1 2013

14

2

Q2 2013

25

7

Laurence adds: “Some commentators are predicting that market volatility will prompt companies to abandon IPO plans in the short term, and the glum news about Portugal shows that there is still scope for a very bumpy ride out of recession.”

“However, there is some good news for AIM. From Autumn 2013, the market will benefit from the government’s recent confirmation that AIM stocks will included in ISAs – which should attract more retail investors to the market.”