AIM sees further drop in companies as junior market sheds resources companies and Brexit jitters strike

Publications that covered this story include:  City AM, The i, This is MONEY and The Times on 4 July 2016.
  • AIM delistings double in a year
  • Just 40 new entrants to AIM in last 12 months – lowest in five years
  • Total money raised by companies joining AIM falls 42% in a year

According to our research, The Alternative Investment Market (AIM) shrank by 60 companies during the last 12 months*, as resources companies continue to exit the market and ongoing Brexit jitters disrupt markets.

The number of delistings in the last year is double the 30 companies that delisted from AIM during 2014/15, as the market’s struggles continue.

During the last year, there were just 40 new entrants to AIM, whilst 100 companies exited the market. This compares with 70 new listings and 100 delistings in 2014/15. This year has seen the lowest number of IPOs on AIM for five years (see graph below).

Our findings highlight that in the last three months alone, 25 companies left AIM, with the main reasons being financial stress & insolvency (nine companies) and M&A activity (eight companies).

There is continued financial weakness amongst resources companies, as a result of low commodity prices combined with pre-Brexit vote worries to depress IPO activity. In the last quarter alone, ten of the 25 companies that delisted from AIM were in the energy and mining sectors.

Laurence Sacker, managing partner of our London and Nottingham offices, says: “Resources companies are continuing to rapidly exit the market and the uncertainty caused by Brexit means there isn’t a steady flow of companies joining AIM.”

“A difficult year for IPOs has been intensified by the shadow of the EU referendum looming over the UK. Companies have been reluctant to list on AIM with the possibility of Brexit and many have been forced to exit the market after struggling financially.”

“With Brexit’s impact still uncertain, there will inevitably be a reluctance for new companies to plan to list on AIM until there is some clarity on the way forward, prolonging the market’s downturn.”

“AIM is seeing a large proportion of companies in the energy and mining sectors leave the market. This is prompting real concern for the health of AIM as these sectors are traditionally a strong source of new entrants.”

The total amount raised by new entrants to AIM has dropped by 42% over the last year. IPOs raised just £721.6m in the last 12 months, compared to £1,238.5m in 2014/15.

Notable companies who have listed on AIM in the last three months include:

  • Time Out Group, the entertainment publisher, raised £90m;
  • Comptoir Group, which includes the popular Lebanese and Eastern Mediterranean restaurant chain Comptoir Libanais, raised £16m; and
  • Hotel Chocolat Group, the premium chocolatier, listed on AIM and raised £12m.

2015/16 saw the biggest net loss in number of companies on AIM in five years – net number of companies listed on AIM

Press release 1

AIM IPOs hit lowest level in five years – down [44%] in a year – number of AIM IPOs per annum

press release 2

* Q3 2015 – Q2 2016.Graph 1