Pictured above: Stephen McElhone
The financial crisis and recession which followed posed
significant challenges for the AIM Market. The number of listed
companies fell significantly - and is predicted to continue to fall
for much of the rest of this year. But a closer look at the
statistics shows there are still reasons to be optimistic and
suggest 2011 is set to see the market's return, says specialist
Harvey Ingram AIM lawyer Stephen McElhone.
By the end of 2009, the number of companies listed on AIM had
fallen from a peak of 1,694 in December 2007, to below 1,300.
Recent analysis by Deloitte predicts this trend will continue
throughout the autumn, before reaching a low of around 1,200 by the
end of the year. So why the cautious optimism?
First, the number of delistings in 2009 was 293 and not
significantly higher than in 2008, when 259 companies delisted. The
reason for the fall in overall numbers was primarily down to just
13 companies entering the market by initial public offering (IPO)
in 2009. For many of those companies which stayed on AIM, 2009 saw
investors offering significantly increased levels of support. While
cautious investors were reluctant to support new offerings,
secondary fund-raisings - funds raised by companies already listed
on the market - increased from £3.2 billion in 2008, to
£4.8 billion in 2009.
Second is the fact that the companies opting to delist were
generally the smallest on AIM and meant that the average market
value of an AIM-listed company at the end of 2009, stood at
£44 million - compared to only £24 million at the end
of 2008. This shake-out appears to have gone a long way towards
boosting investor confidence in AIM companies, while the strong
support for the companies which remained listed has undoubtedly
bolstered satisfaction with the market.
Since then, the Deloitte analysis highlights a steady increase
in activity levels throughout 2010. Following 16 new listings in
Q1, there another 18 during Q2 - compared with just eight during
the same period last year. The rate of companies leaving the market
has also slowed, prompting commentators to conclude that the
numbers of AIM-listed companies will start climbing again by the
end of the year.
Any significant increase in new AIM listings will need a level
of economic certainty which is unlikely to be seen before the
ripples caused by next month's spending review have subsided. But
the trends seen during the past 18 months are cause for cautious
optimism as we head towards 2011.
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