Publications that covered this story include Financial Times, Independent and Daily Express, 7 January 2013.
- Half of delistings due to M&A
- Only 21 companies left due to “financial stress” – 36% fewer than previous year
Just 100 companies left AIM during the course of 2012, the lowest number of departures from the market in seven years, shows our latest research. The number of delistings was down by 14% on 2011, when 116 companies left the market.
The number of delistings has slowed since its peak in 2009, when 280 companies left the market.
The market attracted 43 IPOs during the year, down slightly on the 45 IPOs during 2011. 2005 was the peak year for AIM new listings, with 335 IPOs. At the height of the recession in 2009 there were just 13 AIM IPOs.*
With delistings outpacing admissions, there are now 1,095 companies on AIM, the fewest since 2004. However, the rate of decline has continued to slow, with the net change in the number of AIM companies easing from a loss of 71 companies in 2011 to a net decrease of 57 in 2012.
These remaining AIM companies are, on the whole, in comparatively good financial health, with sufficiently robust business models to withstand the recession. As a result, during 2012, just 21 companies reported that they were leaving AIM due to financial stress, down by 36% on the 33 companies quitting the market due to financial stress or insolvency during 2011, and by 78% on the number leaving for this reason at the peak of the recession in 2009.
Laurence Sacker, partner at our London office, says: “AIM might now be smaller, but it seems to be more perfectly formed. Having shed many of its weaker companies during the recession, the majority of those that are left appear to be in comparatively good shape.”
The attractiveness of companies currently on AIM is underlined by an increase in the volume of M&A activity. During the year 47 companies left the market as a result of being acquired, accounting for nearly half of all departures. This was up from the five year low during 2011 when just 41 AIM companies attracted successful takeover bids, making up 35% of all companies leaving the market.
During 2012 just four companies delisted to transfer to another exchange, including two moving to the London Stock Exchange’s Main Market. This compares with 14 companies that chose to move their listings last year, nine of which moved to the Main Market.
Laurence adds: “The increase in delistings due to M&A is a positive sign for the AIM market, especially given that with valuations having recovered from their nadir in 2009 these acquisitions are not being made at fire sale prices.”
“At the same time we are seeing fewer companies opting to move to another market. This is a good indication that AIM is, for the moment, holding its own against rival growth markets and that companies are confident that remaining on AIM is their best option to fulfil their fundraising needs.”
“However, the support we are seeing for existing AIM companies is not matched by equal demand for AIM new issues, and IPO levels remain fairly anaemic. There will need to be significant improvement in IPO activity if AIM is to ensure it can retain its lead as the world’s premier growth market.”