- Extra funds raised to help businesses weather economic disruption
Our research shows that there has been a 53% increase in the amount of money raised by AIM listed companies through secondary fundraisings in the first half of 2020* of £2.8bn compared to the £1.8bn raised in the same period in 2019.
AIM companies have rushed through rights issues and placings as they build up defences against the current economic storm.
The Alternative Investment Market (AIM) has come into its own during the disruption caused by COVID-19, showing its strength as a platform for fundraising despite the lockdown.
AIM-listed businesses have been able to raise significant funds to protect balance sheets and provide working capital during the pandemic, for example:
- Online retailer ASOS raised £247m in April
- Dart Group, owner of Jet2holidays raised £172m in May
- Robotics software company Blue Prism Group raised £100m in April
As companies are emerging from the worst of the lockdown, there is an increasing number who are raising equity to fund expansion, taking advantage of opportunities the pandemic has created.
For example, online retailer BooHoo raised £198m in part to fund acquisitions of the online businesses of insolvent fashion brands Oasis and Warehouse in June 2020.
AIM-listed companies are in a better position to raise equity than privately-owned companies during the period of coronavirus-driven economic stress.
AIM helped growth businesses weather the last financial crisis and has considerably improved the quality of its listed companies since then. This has led to more investors feeling comfortable backing AIM businesses as they have confidence that share prices can return to established normal levels relatively quickly once the economy begins to recover.
Daniel Hutson, partner at our London office, says: “Since March, AIM has proven its value as a fundraising platform and given its companies a vital opportunity to shore up their balance sheets in response to COVID-19.”
“There is clearly appetite in the market, with investors still being confident enough to invest in growth companies. AIM was tested through the last financial crisis and emerged a more-robust, better-regulated market that is prepared to handle disruption.”
“Some private businesses have found that PE and VC investors have taken a cautious approach when it comes to deploying cash during the Covid-19 pandemic, limiting their options for raising equity. Institutional investors appear to have been much more comfortable with shoring up the balance sheets of listed businesses, especially at reduced prices.”
“Now that we are beginning to emerge from what we hope is the worst of the pandemic, we may start to see an upturn in the number of new entrants to the market along with the strong level of secondary raisings.”
