AIM delistings drop another 18% but still more than new listings

Titles that covered this story include the Times, 15 July 2010, the Financial Times, 15 July 2010, the Independent, 15 July 2010, and the Daily Express, 15 July 2010.

  •  Delistings still three times the number of new listings
  • Jump in companies upgrading to full listing on London Stock Exchange

The number of companies delisting from AIM in Q2 2010 has dropped another 18% in the last quarter to 36* in Q2 2010, down from 44 in Q1 2010 reveals research from our Corporate Finance team and Trowers & Hamlins, the City law firm.

This is the second consecutive quarter of falling delistings from AIM.  At the peak of the recession AIM companies were delisting at the rate of 70 per quarter.

However, the research shows that the number of AIM delistings still outnumber new listings by three to one in Q2 2010, with just 12 new companies** joining AIM in Q2.

Charles Wilson, partner at Trowers & Hamlins comments:  “This further fall in delistings is great news but everyone is going to be a lot happier when the number of IPOs overtakes the number of delistings.  Parity is still a little way away.”

“AIM is a global market so it is bound to take a hit from the weakness in the global market for IPOs.”

The research also shows a sudden decline in takeover activity on AIM, with the number of takeovers of AIM listed companies completed in Q2 2010 down 40% to just 12 compared to 20 the previous quarter.

Laurence Sacker, partner in our London office says:  “With AIM share prices recovering so strongly over the last year, the bargain basement prices just aren’t so available.  The opportunistic M&A deals seem to have eased off a little.”

“Again the slowdown in M&A deals is partly because AIM is now such a big global exchange that it is going to be impacted by global problems like the European sovereign debt crisis.  AIM isn’t an obscure backwater that can be expected to be immune from the big trends in the capital markets.”

Jump in companies transferring to another exchange

Our research also reveals that the number of companies leaving AIM to join another exchange was six in Q2 2010, with four of the six companies joining the main London stock exchange.

Laurence comments: “The graduation of AIM companies to the London Stock Exchange is excellent news for AIM.  The junior market is there to nurture companies, feed them capital, see them improve their profitability and move them on to a full stock market listing.”

“This is exactly why so many companies come to AIM. They are ambitious companies that target full listing as AIM is a vital stepping stone in that development.”

Number of companies delisting from AIM*

aim-number-of-companies

AIM takeovers completed*

aim-takeovers-completed

Reasons for de-listing Q4 2009 Q1 2010 Q2 2010
Number % of
total
Number % of
total
Number % of
total
AIM too expensive / too much of a burden 14 19% 4 9% 3 8%
Change of listing to other exchange 2 3% 3 7% 6 17%
Failure of strategy 9 12% 5 11% 6 17%
Financial stress & insolvency 22 30% 10 23% 7 19%
M&A 23 32% 20 46% 12 33%
No NOMAD 2 3% 1 2% 1 3%
Other 1 1% 1 2% 1 3%
Total 73 100% 44 100% 36 100%

* Excludes reverse takeovers
** Excludes readmissions