AIM delistings fall to two-year low

Titles that covered this article include the Independent, 6 April 2010.

  • 40% drop in delistings from previous quarter
  • Takeovers the dominant reason for delisting
  • Less companies delisting to due financial stress or cutting costs

The number of companies delisting from AIM in Q1 2010 has dropped to just 44 down 40% from 73 in Q4 2009 reveals research from UHY Hacker Young and Trowers & Hamlins LLP, the City law firm. (Full data below.)

The number of delistings in Q1 2010 is the lowest quarterly total since Q1 2008.

The research also shows that the proportion of delistings due to the AIM company being taken over now accounts for 46% of all delistings compared to 32% the previous quarter and is the highest proportion since Q4 2007.

Just 10 companies had to delist in Q1 2010 because of insolvency or financial stress which is less than half the 22 that delisted because of financial stress in Q4 09.

Charles Wilson, Partner at Trowers & Hamlins comments: “The delisting crisis appears to be over.”

“Not only do these figures show that AIM is no longer hemorrhaging companies, almost half of those that have delisted are doing so because they have been taken over which is a positive sign for the market after a turbulent eighteen months to say the least.”

“Whilst this quarter may mark the turning of a corner, however, there are still plenty of challenges facing both the UK and the global economy.”

Laurence Sacker, Partner at UHY Hacker Young says: “We are seeing evidence of a leaner, trimmer AIM emerging from this recession.”

“During the downturn AIM companies were forced to strip back on their operations to ensure survival, which means that many now have much lower cost bases and smaller debt burdens.”

“The companies on AIM are now much healthier, and the market coming out of this recession is fundamentally stronger than the one that went in to it.”

Just four companies delisting in Q1 due to cost of listing on AIM

The research by Trowers & Hamlins and UHY Hacker Young also reveals the number of companies delisting from AIM because of the high cost of listing has fallen to just four, down from 14 in Q4 09 and from 20 a year ago (Q1 09).

Laurence Sacker comments: “As widespread cost cutting exercises took place last year many companies decided that the financial and administrative costs of listing on AIM outweighed the benefits.”

“You would hope that, by now, most of those companies that were considering delisting in order to save cash will have reviewed and rejected that option.”

“Those companies now remaining on AIM are more cash rich and so it is likely that delistings undertaken just to cut costs will continue to decrease in number.”

Percentage of delistings due to takeover activity*

resizedimage500299-m-and-a-deals

*Does not include reverse takeovers

Number of delistings due to financial stress & insolvency

number-of-delistings-due-to-financial-stress-insolvency

 

 

 

Q1 2009 Q4 2009 Q1 2010
Reason for delisting Number % of total Number % of total Number %of total
AIM too expensive/too much of a burden 20 27% 14 19% 4 9%
Change of listing to other exchange 5 7% 2 3% 3 7%
Failure of strategy 2 3% 9 12% 5 11%
Financial stress & insolvency 12 16% 22 30% 10 23%
M&A 6 8% 23 32% 20 46%
No NOMAD 27 36% 2 3% 1 2%
Other 2 3% 1 1% 1 2%
Total 74 100% 73 100% 44 100%