4 October 2010
Titles that covered this article include the Financial Times, 4 and 10 October 2010, the Guardian online, 4 October 2010, and the Daily Express, 4 October 2010.
- Number of new listings slowly rising
The number of companies delisting from AIM has risen by 25% in the last quarter to 45* in Q3 2010, up from 36 in Q2 2010 reveals research from UHY Hacker Young and Trowers & Hamlins LLP, the City law firm. (Full data below.)
However, the research we conducted indicates that the dominant cause of delistings is M&A activity, with 20 companies (44%) leaving AIM in Q3 2010 for that reason.
Not including M&A activity, delistings over the last three quarters have actually stabilised at 24 in Q1 and Q2, and 25 in Q3.
Charles Wilson, partner at Trowers & Hamlins comments: “Businesses with the finances to pursue a ‘buy and build’ policy clearly believe conditions are now stable enough for them to do so.”
“The levelling out of delistings over the last three quarters, once M&A activity is factored out, suggests some companies are in fact being acquired before they are forced to delist because of financial stress.”
Our research also reveals a steady rise in the number of new entrants** to AIM, rising to 16 in Q3 2010 from 13 in Q2 2010.
This is significantly higher than just the two companies who joined in Q2 2009, but still some way off the 27 new AIM listings recorded in Q2 2008.
Chris Lowry, Corporate Finance partner in our London office says: “As with the rest of the economy, AIM’s recovery is proving not to be a sudden bounceback but more of a slow crawl.”
“AIM is undoubtedly stronger that it was a year ago, which is why it is attracting more new entrants. But it could be some years before we see companies joining at the rate we saw pre-recession.”
Number of businesses delisting due to financial stress or insolvency well down on last year
The number of companies delisting from AIM because of financial stress or insolvency rose from seven in Q2 2010 to eight in Q3 2010.
However, this is down significantly on the 27 companies that delisted in Q3 2009 due to financial stress, and almost on a par with the seven that did so pre-recession in Q3 2008.
Chris comments: “The rate of insolvent companies delisting from AIM is edging ever closer to the level that prevailed before the recession.”
“As AIM continues to shed its weaker companies it will be interesting to see how many of them delist because of insolvency, and how many delist to cut costs or because they have been taken over.”
Our research also shows that seven companies (16%) left AIM in Q3 2010 because of the cost of listing on AIM, four more than the previous quarter and three more than Q1 2010.
Charles Wilson at Trowers & Hamlins comments: “Whilst AIM’s wounds are healing, the recession is clearly leaving scars that will take time to disappear.”
“The good news for these companies deciding to delist to save costs is that last year they may well have run out of time to make that decision, when delistings due to financial stress or insolvency were soaring.”
Number of companies delisting from AIM*
Number of companies delisting from AIM due to financial stress or insolvency
|
Reasons for de-listing |
Q1 2010 |
Q2 2010 |
Q3 2010 |
|||
|
Number |
% of total |
Number |
% of total |
Number |
% of total |
|
|
AIM too expensive / too much of a burden |
4 |
9% |
3 |
8% |
7 |
16% |
|
Change of listing to other exchange |
3 |
7% |
6 |
17% |
5 |
11% |
|
Failure of strategy |
5 |
11% |
6 |
17% |
5 |
11% |
|
Financial stress & insolvency |
10 |
23% |
7 |
19% |
8 |
18% |
|
M&A |
20 |
46% |
12 |
33% |
20 |
44% |
|
No NOMAD |
1 |
2% |
1 |
3% |
0 |
0% |
|
Other |
1 |
2% |
1 |
3% |
0 |
0% |
|
Total |
44 |
100% |
36 |
100% |
45 |
100% |
* Excludes reverse takeovers
** Excludes readmissions
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