Major turnaround for AIM as new listings finally outpace departures

Publications that covered this article included, The Daily Express, 3 October 2011, The Daily Mail, 3 October 2011, The Financial Times, 3 October 2011 and The Independent, 3 October 2011.

  • New listings outpacing departures for first time since 2007
  • But actual funds raised are weak

Our new research reveals a dramatic and unexpected turnaround for AIM with the number of new companies joining the market overtaking those leaving the market for the first time since before the financial crisis.

24 new companies joined AIM in Q3 2011, the highest number of new listings in one quarter since before the start of the financial crisis.

Just 21 companies left AIM in Q3 2011, the fewest to leave the market in one quarter since Q2 2006 (18), a 50% drop in the number of companies leaving AIM on the previous quarter (42 companies left the market in Q2 2011).

Laurence Sacker, Partner at our London office, comments: “AIM has produced a quite stunning result in the last quarter, taking a big step in the right direction. Market followers will have their fingers crossed that this is able to continue.”

“Despite turbulent market conditions caused by the Eurozone crisis, AIM has continued to attract a host of young and ambitious companies, which speaks volumes about the confidence people have in AIM.”

“However, AIM’s sheer size means that it has not been immune to the global flight from risk.”

Laurence explains that despite an influx of new listings, money raised by new issues has not kept pace, with total money raised to the end of August just £504 million, down 8% from £548 over the same period in 2010. The average amount of new money raised per AIM IPO has fallen by 20% to approximately £8million so far in 2011 (eight months to August 31st 2011) compared with to £10m per IPO over the same period in 2010.

Money raised through secondary fundraisings (such as Rights Issues) remain high, £2.8 billion to the end of August 2011, with investors preferring to back those companies who have already established themselves on AIM.

50% of departures now for ‘positive’ reasons

Our research reveals that 52% of companies leaving AIM in the last quarter either graduated to the Main Market or due to M&A activity, a sign that the market remains healthy.

Similarly, just 14% left as result of financial stress or insolvency, the smallest proportion of companies to leave since Q4 2008 (13% delisted due to financial stress in Q4 2008).

Laurence comments: “That is the AIM market working exactly how AIM investors would like it to work.”

“Losing companies who are either graduating to the Main Market or being taken over by another company are signs of good health for AIM.

“It really shows what confidence companies have in AIMs ability to take them to the next stage in their development – most companies listing on the exchange will have these outcomes in mind when they launch their IPO.”