Sharp jump in the number of companies quitting AIM as financial stress bites

Publications that covered this story include City AM, 10 October
  • Slump in the number of new AIM IPOs
  • AIM loses 66 companies in a year

The number of companies de-listing from AIM has increased 20% to 107 in the last year (to Sept 30), up from 89 in the previous 12 months.

Financial stress and insolvency was the leading cause of AIM delistings last year – accounting for the removal of 30 companies from the junior stock market over the last year.

The impact of low oil prices have caused particular difficulties with one-third of the companies that left the market because of financial difficulties coming from the energy sector. Low oil prices have both undermined the profitability of those oil & gas companies already in production and made it far harder for earlier stage companies to raise funds needed to finance exploration.

Brexit related uncertainty has also made for a far tougher fundraising environment.

Only 41 new companies listed on AIM in the last year – down 29% from the 58 that listed in the previous twelve months. This is in line with the UK main market, which also saw a slump in the number of floats over the summer.

Combined with the sharp rise in the number of companies de-listing, the drop in AIM IPOs has led to a net decrease of 66 companies listed on the AIM market. This means AIM has finished its ninth successive year of shrinkage.

Laurence Sacker, managing partner and head of corporate finance in London, says: “Depressed oil prices and this summer’s Brexit woes have taken their toll on AIM this year.”

“Dozens of companies have quit the market as a result of their financial difficulties. This is particularly obvious in the oil and gas sector. This industry has always been a rich source of companies for AIM, but the continued slump in oil prices has put many energy companies in a delicate financial position.”

“AIM faces a double whammy – just when it needs new blood in the form of IPOs, the number of companies choosing to float on the junior market is dropping.”

“All told, it’s been a challenging year for AIM, but it’s not all doom and gloom. There have been signs of investors regaining confidence in the UK market. Many investment banks and Nomads predict an uptick in the number of IPOs in the coming year.”

“It’s entirely possible that this rising tide will lift AIM. There has been an increase in interest from overseas, with investors attracted to the weaker pound, and the domestic economy has started to recover from its post-Brexit jitters.”

The number of companies de-listing is increasing…

Number of companies de-listing from AIM

While the number of AIM IPOs is dropping…

Number of AIM IPOs