Value of AIM IPOs jumps 65% on last year

Publications that covered this story include The Financial Times, The Times and Independent, 2 January.

  • AIM growth back on track for first time in six years
  • AIM company insolvencies lowest since 2007

The number of companies on the Alternative Investment Market (AIM) is growing for the first time in six years thanks to an influx of IPOs and a fall in the number of companies leaving the market*, according to our research.  The total money raised by IPOs has also increased substantially, up by 65% on last year.

In the last three months, new entrants to AIM have outweighed departures for the second quarter in a row, after a six year decline in the number of companies.  The amount of money raised by IPOs in the three months to the end of December more than doubled compared to last quarter, with 25 IPOs raising £562 million between them, compared to 20 IPOs raising a combined total of £279 million in Q3 2013.

Our research reveals that the number of insolvencies amongst AIM companies is now at its lowest level since 2007,** with just 20 companies quitting AIM due to financial stress this year, compared to 95 at the height of the recession in 2009.

The number of companies leaving for other negative reasons has also fallen dramatically.  For example, the number leaving AIM because of the cost and regulatory requirements involved in maintaining a listing has fallen from 50 in 2009 to just 3 this year.

Over the course of 2013 there were 69 IPOs on AIM, raising a total of £1.17bn – a 65% increase on the £707 million raised in 2012.  The total value of IPOs on AIM has now reached its highest since 2008.

The number of companies delisting from AIM in 2013 was at the lowest level in seven years, with only 75 companies leaving the market during 2013, less than a third as many as the 280 leaving the market during 2009, and down by 25% on 2012.

The increase in the total number of companies on AIM, coupled with strong money-raising, could be a sign that the market has turned the corner.

Recent tax changes designed to make the market more attractive to investors by reducing the cost of trading on AIM should also make the market more attractive prospective issuers.  AIM securities were made eligible for ISAs for the first time in summer 2013, and from April 2014, trading in AIM stocks will also be stamp-duty free.

Laurence Sacker, Partner, says: “AIM has been through some very difficult years, but the shakeout of weaker companies we saw at the height of the credit crunch as companies became insolvent or were forced to reassess the value of their AIM listing has helped to make the rest of the market more resilient.  As a result the number of companies leaving the market for negative reasons has fallen dramatically.”

Laurence Sacker adds: “Barring any unexpected shocks, with investors’ risk appetites returning and the UK economic revival seemingly well underway, 2014 looks set to be a very positive year for AIM.”

 *Year to 31 December 2013 – all figures correct to 24 December 2013, and estimates thereafter.

** 18 companies delisted in 2007 due to insolvency or financial strain.