The Midlands AIM market looks set to bounce back as confidence begins to return and IPO activity nationally shows signs of improvement, according to experts at PwC in the Midlands.

A PwC report, 'Securing AIM's future'  indicates that while the number of companies quoted on the Alternative Investment Market (AIM) nationally is down to 1,200, following a sharp fall from its peak in 2005-2007, there are signs of the market bouncing back.

The PwC research outlines the prospects for AIM, which has raised almost £70 billion since its inception in 1995. The research was based on market analysis and in-depth interviews with AIM companies, NOMADS and analysts.

While all markets experienced some decline in value in the aftermath of the financial crisis, AIM's fall was more marked. However, the research shows that over the last year AIM has outperformed comparative markets, giving cause for optimism.  In the 12 months to 30 September 2010, the AIM 100 rose by 21% and the AIM All Share by 22% while the FTSE Small Cap only managed an increase of 4% and the FTSE fledging just 5%. Indeed the FTSE All Share only grew by 11% over the same period.

According to AIM market experts at PwC in the Midlands, renewed confidence in the market could provide the 'push' needed to get the Midlands pipeline moving.

Andrew Hammond, Assurance partner at PwC in the Midlands, said:

"The recent national increase in IPO activity is heartening and could signal the beginning of a recovery on AIM. PwC's report bears this out and it is only a matter of time before the renewed confidence that is already becoming evident in the market nationally begins to rub off here in the Midlands.

"There is also a sense that AIM is becoming a leaner, stronger market as a result of the shake out of smaller companies in 2009. A new emergent AIM is showing maturity as careful and realistic valuations and judgements about whether to float at all are being made and for Midlands companies the market continues to present a good opportunity for the right companies to raise capital, cost-effectively. "

The report also dispels some myths that abound about AIM in terms of a perception that the market has a lack of liquidity, overly-relaxed governance, low trading volumes and limited analyst coverage.

PwC provides advice on the key attributes that lead to success for AIM companies, as follows:

·         Clear rationale about why the company is  joining or remaining on AIM and what the business  expects to achieve from membership;

·         Clear strategy for development that sees  AIM membership as a catalyst for investment and growth, rather than an end in itself;

·         A compelling case for investment that focuses closely on the risk and return appetite of the target investor;

·         Highest standards of transparency and governance, including the willingness to accept full scrutiny and challenge from investors and non-executive directors;

·         Ability to deal with the vagaries of markets and the responsibilities they place on boards and major shareholders.

Andrew Hammond, Assurance partner at PwC in the Midlands, concluded:

"Although a return to the boom years is highly unlikely, the turnaround in 2010 means that AIM companies can look forward to the future with increasing confidence. In a still fragile and uncertain economic climate, the success of this market in attracting innovative and ambitious Midlands companies is hugely important for our ability to create jobs in the region and help build future growth."