The number of companies listed on AIM is set to increase in the
first half of 2012, for the first time since 2007, according to
analysis by Deloitte, the business advisory firm. The significant
shake-out of companies from the market over recent years appears to
be nearing completion as the level of de-listings has reached a six
year low in 2011.
Richard Knights, partner and capital markets specialist at
Deloitte Midlands, comments: "Since the number of companies on AIM
peaked at 1,694 at the end of 2007, we have seen an almost non-stop
decline in numbers to 1,150 companies listed as at 30 November
2011, a reduction of approximately one third. Over this time,
listed companies have departed the market in droves, either
voluntarily, if they don't perceive ongoing value in their listed
status, or involuntarily, generally due to their financial
circumstances in these difficult economic times.
"However, to the end of November 2011 the total number of
de-listings was just 131. This is a fall of 55% compared with the
peak recorded in 2009, when 293 companies delisted from the market,
and is the lowest level of de-listings since 2005.
"By its very nature AIM is a dynamic market. The classic AIM
strategy for a company is to join during an expansion phase, use
AIM to build profile and access growth capital, and then depart
either to a premium listing or potentially be taken over by a
larger player in the same industry. The consequence of this
dynamism is that over the medium term the constituent members of
the market can churn quite significantly. From another angle, if
you compare the top 50 capitalised companies on AIM at 31 December
2007 only 9 remain in the top 50 at 30 November 2011 - it is a
substantially changed population.
"For several years a common refrain of AIM commentators has been
that there are too many companies of dubious quality on the market.
This has been perceived as the consequence of the AIM boom between
2005 and 2007 when a number of unsuitable companies completed
listings. However, we believe that natural churn since then means
that AIM is effectively much changed now and should be looked at
afresh.
"The AIM markets return to growth will stimulate a more positive
outlook for investors in small cap high growth companies. 2012 is
set to be an exciting year for followers of the AIM market."