AIM shrinks by another 16 companies in 2017

Publications that covered this story include The Times and the Daily Mail on 29 December, Interactive Investor on 24 January and Investors Chronicle on 22 February.
  • 962 companies versus 1694 at peak in 2007
  • But positive signs as new listings increase 34% in a year

The Alternative Investment Market (AIM) shrunk by another 16 companies in 2017, according to our research, as companies leaving the junior stock market continued to outweigh new IPOs.

A total of 75 companies cancelled their listings on AIM in 2017 (YTD) either because they became insolvent, were taken over, or lost their NOMAD (having a NOMAD is a requirement of AIM).

2017 was the third successive year that the total number of companies on AIM has fallen. However, the net loss in 2017 is significantly smaller than previous years – 2015 and 2016 each saw a net 59 companies leave.

The continued shrinkage of AIM is partly down to the low number of new listings – there were 59 IPOs this year, below the previous ten years’ average of 61 IPOs per annum.

Laurence Sacker, managing partner in our London office, comments: “The continued atrophy of AIM is not good news.”

“Both UK PLC and the City benefits from a vibrant junior market.”

“AIM is meant to have high risk companies so having a certain percentage of AIM companies fail is not a problem – but a poor IPO pipeline is. AIM should be competing aggressively for more of the corporate finance deals that get done by PE houses.”

The proportion of overseas companies listed on AIM has suffered in particular with just 16% of companies on AIM now from overseas – down from one in five AIM companies five years ago.

Overseas companies may have been put off listing on AIM by more stringent regulations than on their home markets. Higher levels of PE investment in emerging markets have also made it less necessary for overseas companies to come to AIM.

The lack of overseas companies coming to AIM could also be partly due to worries about how Brexit might affect the UK’s capital markets.

Laurence adds: “With so much uncertainty surrounding how Brexit might impact the status of the UK’s capital markets, it is understandable that smaller overseas companies are putting off any decision as to whether to list in the UK.”

“If you are a small company, where you list can be even more critical to your future than for a corporate giant like Saudi Aramco.”

“The UK Government should prioritise sealing a good deal with the EU over the status of our financial services sector. The delay in getting that deal for the City benefits nobody on this side of the Channel.”

“Now the LSE is free of the distractions of a merger with Deutsche Boerse and its own succession issues – we hope it can find more resources to promote and improves the AIM market.”

There are some significant positives to come from 2017, including:

  • New company listings on AIM are at a three-year high, up 34% to 55 in 2017 from 44 in 2016, and up from 39 in 2015
  • Only nine companies de-listing from AIM in 2017 cited ‘financial stress and insolvency’ as the reason for leaving – a significant fall of 63%, down from 24, on 2016

AIM saw a net loss of 16 companies last year – a significant reduction on losses of 2016 and 2015

*As at December 31 2017