3 January 2012
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Company departures from AIM rise, new listings fall
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More companies leaving due to financial stress
Our latest research has shown that the on-going Eurozone crisis is heaping pressure on AIM, with company departures from the market once again outpacing new listings.
24 companies left AIM during Q4 2011, up 9% from 22 in the previous quarter. However, the number of companies joining the market has dropped, down 38% from 26 in Q3 2011 to just 16 in Q4.
There was also an increase in the number of companies leaving AIM citing financial stress as a reason, up from just four companies in Q3 2011 to seven in Q4 2011 as economic growth stuttered.
Over the year as a whole, the number of new listings increased only slightly, rising from 65 in 2010 to 69 this year. The number of companies leaving the market dropped 27%, year on year, down from 158 in 2010 to 116 this year.
Laurence Sacker, partner in our London office, comments: “Although AIM has clearly pulled through some very difficult times, it has not been immune to the current problems with the Euro.”
“In the short term, a full recovery in the IPO market seems unlikely. Investors have retrenched into defensive assets and until they have confidence that politicians have fixed the Eurozone crisis once and for all, they are unlikely to return to the AIM market en masse.”
“Anaemic economic growth has meant worsening trading conditions for many domestically focused AIM companies. Unfortunately that has led to a rise in the number of AIM companies being forced off the AIM market because of weak finances.”
Although M&A activity remains high, accounting for 38% of departures in the last quarter, Laurence points out that some of these departures may have come about as a consequence of companies finding it harder to raise funds through secondary listings.
Laurence explains: “Those companies that were unable to raise the funds they needed through secondary issues may have been more likely to succumb to takeover bids. We saw a number of companies being snapped up by private equity houses in this way in the last quarter alone.”
While money raised through secondary fundraisings (such as Rights Issues) remains relatively high, reaching £3.4 billion to the end of November 2011, it was down by 25% from the £4.5 billion raised over the same period last year.
AIM IPOs fundraising falters
New companies listing on AIM are finding it much harder to raise funds than last year.
Despite an increase in new listings on AIM this year, the total money raised by new issues was down by 77% compared to last year. The amount raised through IPOs fell to £513 million in the 11 months to November 2011, down from the £908 million raised in the same period last year.
Similarly, the average amount of new money raised per AIM IPO has fallen by 50% to approximately £9 million so far in 2011 (11 months to November 31 2011) compared to £18 million per IPO over the same period in 2010.
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