Publications featured in include: City AM and The i.
The financial distress caused by COVID-19 has not resulted in mass de-listings that some may have expected at the start of the lockdown. In comparison, 66 left the market in 2009/10 after the global financial crisis due to financial difficulties.
IPO Boom leads to first increase in AIM in almost four years
Helped by a boom in IPOs, the AIM market grew for the first time since Q3 2017 increasing by a net five companies in Q2 2021**. The last quarter has seen 16 new companies listed on AIM, the highest number since Q2 2018.
The improvement in the overall quality of companies on AIM, partly achieved through more stringent quality control, is making AIM the stock market of choice for larger cap companies.
Daniel Hutson, Audit partner in our London office says: “AIM is going through a well-deserved purple patch at the moment. It is too soon to say that the gradual shrinkage of AIM is over but the recent spate of IPOs is a positive sign.
AIM companies have also coped far better with the COVID crisis than the financial crisis. Insolvencies of AIM companies have been very rare, further enhancing the reputation of the market.
AIM is now a much more robust market than it was in the last recession – it has better companies, better regulation and a better orientation towards growth sectors like technology.”
AIM M&A deals
Of the companies that left AIM in the last year, 26 were the subject of takeover deals, accounting for 55% of all de-listings, the highest proportion since 2006***.
Adds Daniel Hutson: “AIM is an increasingly attractive hunting ground for both trade buyers and private equity firms. The increase in regulatory scrutiny that AIM has been subject to has meant that many poorer quality companies have left the market or chosen not to list, leaving behind a far higher quality pool of companies.”
The recent spate of takeovers could help continue the virtuous circle for AIM. Institutional investors are increasingly willing to take larger, less liquid stakes in AIM companies. This is due to their increased confidence that they will be able to exit through a takeover if the share price dips far below the businesses’ breakup value.