Publications that covered this story include Financial Times, City AM and Independent, 17 June.
- Now 8.4% of funds raised compared with 10.6% last year
The cost of listing on AIM has fallen for the first time in seven years, down to 8.4% of all funds raised last year*, from 10.6% in the previous year, according to our research. (See graph below)
Increasing competition amongst Nomads and other financial advisers for AIM work has started to push down the rates that they charge to companies for AIM IPO work.
Keeping AIM listing costs low is important if the market is to remain an attractive option for fast growing companies from around the world looking to raise capital for expansion.
Laurence Sacker, partner, comments: “Corporate finance advisers are feeling the pressure after several years of low levels of IPO work. They are willing to be flexible over pricing in order to bring in the work needed to keep their teams ticking over.”
Laurence says that there is also an increasing number of small corporate finance boutiques being set up that will take on elements of AIM due diligence work at lower margins than full service corporate finance teams.
Last year saw Seymour Pierce, one of the largest AIM Nomads, go into administration partly due to low revenues within its corporate finance practice.
Even in a recovering IPO market, competition from other markets makes it particularly important that the AIM advisory community keep costs under control.
Laurence adds that: “Nomads are operating in an increasingly international market. They know that businesses will not go ahead with AIM IPO plans if they consider the overall cost of listing on AIM, including the advisory fees they pay, to be excessive and feel they can get a better deal in another financial centre.”
Increases in the average money raised by new AIM listings have also helped reduce the cost of listing as a proportion of money raised. Figures show that the total amount of money raised from new listings on AIM increased by 26% to £676m in 2012, up from £518m the year before.
The average amount raised per listing increased by 37% .The total number of new listings was 43, with an average capital of £15.7m raised per company. In the previous year, the average raised per company by 45 new listings was £11.5m.
Just seven companies raised under £1m on IPO in 2012, a slight decrease from eight the year before.
Laurence concludes that: “The overall picture for AIM is certainly an improving one. The number of companies exiting is on the decline, and companies joining the market appear to be finding fundraising slightly easier. These are good news stories as AIM advisers go out and sell AIM’s strengths to companies around the world.”
Average costs of AIM IPO as a percentage of the funds raised – includes fees to London Stock Exchange and to professional advisers
*Year to December 31st 2012. Cost of advisers, AIM admission fees and other costs as a percentage of all money raised in the AIM IPO.