AIM stages recovery as delistings fall over 2010
Monday 03 January 2011
London's Alternative Investment Market (AIM) mounted a recovery over 2010, with the number of companies opting to flee the market easing by 44 per cent.
The market, which attracts small companies seeking to raise capital through floating shares, saw 157 departures over 2010, down from 280 the previous year, according to figures from the law firm Trowers & Hamlins and the accountancy group UHY Hacker Young.
In another encouraging sign, the pace of new listings also picked up, more than trebling to 65 companies in 2010, from 18 in 2009. The amount of money raised by new flotations was also higher, climbing from a total of £610m in 2009 to around £1bn in 2010.
"AIM is certainly heading in the right direction," said Laurence Sacker, a partner at UHY Hacker Young. "Delistings appear to be stabilising," he said, "while the upturn in IPO [initial public offering] and new issue activity is encouraging. However, the market's return to optimism is tempered by a lot of caution – conditions are not yet what you would call buoyant."
The figures evidence a welcome change from a year ago. Back in 2009, 212 companies blamed financial problems, the failure of their business strategies, the cost of maintaining a listing or other difficulties for leaving the AIM index. In 2010, however, only 72 companies left AIM because they could not maintain their listing or did not see the value of having one.
The figures also show that deal activity, as opposed to financial stress, was behind the bulk of delistings last year. In all, mergers or acquisitions (M&A) activity was behind 69 or 44 per cent of delistings in 2010, compared to just 56 or 20 per cent in the previous year.
"M&A activity on AIM is just starting to pick up," Mr Sacker said. "While in some cases this may mean weaker companies are being bought out rather than quitting the market, the fact that would-be buyers of AIM firms are increasingly able to finance deals is nonetheless a positive sign."
Although positive overall, the figures also show that of the total number of departures in 2010, some 10 per cent were down to companies changing their listing to another exchange, up from 4 per cent in 2009.
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