AIM exits fall to their lowest level since financial crisis

Publications that covered this story include today’s Financial Times, Independent, Daily Mail and Daily Express.

  • However new AIM listings at lowest level for a year

Only 14 companies left AIM in Q1 2013, the lowest number of departures in any quarter since the start of the financial crisis, according to our research.

Just 79 companies have left AIM over the last year*, significantly fewer than the 257 that left in 2008/09 at the peak of the financial crisis (see graph below).

The low level of companies departing AIM is another sign of the improving financial health of UK businesses. The number of corporate insolvencies has now dropped back to pre-recession levels – 4,841 in Q4 2012 compared to 4,793 in Q2 2008.

The proportion of companies departing AIM due to financial difficulties is also declining. Only 14% of departures in Q1 2013 were due to financial insolvency and stress, a decrease from the 23% in the preceding quarter. 36% of departures in Q1 2013 were due to mergers and acquisitions, up from the 32% in the previous quarter.

Laurence Sacker, partner, says: “AIM has certainly come through the worst of the financial crisis, and the decrease in the number of companies leaving and the decline in departures due to financial stress are both signs of the market’s improving health.”

“However, there is still only a very modest level of capital being raised by new companies. It is concerning that there seems to be little enthusiasm amongst small or medium sized businesses in the UK or internationally to use AIM to support expansion or the kinds of new investments needed if we are to have a sustained recovery.”

There were only 9 new entrants to AIM in Q1 2013, raising £69m. This is far less than the £270m raised by the 12 new listings in the final quarter of Q4 2012, and the lowest number of new entrants for a year**.

However, in its latest Budget, the Government announced plans to abolish stamp duty on trading AIM shares, and confirmed that AIM-listed stock will become eligible for inclusion in ISAs from next April.

Laurence adds: “These changes are the result of the London Stock Exchange’s sustained lobbying and while they can’t fix the dampening effect of the global economic situation, they should help in boosting AIM’s market liquidity, drawing new investors and companies into the market.”

Number of companies delisting from AIM from 2006/07 – 2012/13

resizedimage500292-AIM-de-lisiting-apr-2013

*Year to March 31st 2013

**There were 8 new listings in Q1 2012