AIM listings cost inflation cools down

  • Advisers compete on price to get a slice of increased IPO activity
  • Costs have risen by a fifth in just five years

Our research reveals that the cost of listing on AIM has risen at its slowest rate in over five years.

AIM listing costs, including professional fees and all other associated costs, rose by less than 1% in the last year* compared to an average 5% rise in fees in each of the previous four years.

The cost of listing is now 7.29% of all funds raised (Full results below).

Over the last five years the cost of listing on AIM as a percentage of funds raised has risen by a fifth from 6.1% in 2005 as due diligence costs have mounted.

The increase in the cost of listing on AIM has been slowed by a more competitive approach to pricing by NOMADs.

Laurence Sacker, corporate finance partner in our London office, comments: “That is good news as AIM needs to keep the cost of listing down in order to keep well ahead of its international competitors.”

Laurence explains that the longer term increase in the costs of listing on AIM has been driven by the tightening up of the regulatory environment around the AIM market since 2005.

Says Laurence: “Although most would agree that those changes have been for the best at the same time these changes have increased the extent of due diligence undertaken on candidates for the AIM market, driving up the cost of listing on AIM.”

“The trend to increase levels of due diligence work seems to have now levelled off in the last year or so.”

“With the AIM market activity increasing investment banks and broking firms are once again competing for market share in AIM IPO work. So they are being slightly more flexible on fees.”

Adds Laurence: “If a company plans its IPO on AIM properly then the costs can be quite easily controlled.”

“The value a company gets from an AIM listing is far greater than a listing on other junior stock markets – much of this comes from AIM’s unrivalled ability to help companies raise funds from further fundraisings post-IPO.”

2010 saw a big recovery in the number of AIM listings, up from 18 in 2009 to 65 in 2010.

Cost of listing on AIM levels off

* Year to January 1st 2011.