Small Talk: Aim delistings still on the rise but experts see hopeful signs
Monday 04 January 2010
It will come as no surprise to regular readers of this column that the number of delistings on Aim has continued to rise, making the past year the worst by far for the small-cap sector.
However, research published today shows that while Aim cannot claim to be in great health, the picture may not be as bleak as the numbers suggest.
According to Trowers & Hamlins, a City law firm, and the accountancy group UHY Hacker Young, the number of companies delisting from Aim increased in the fourth quarter to 73, from 63 between June and September.
However, the firms say that the unexpected jump in delistings has been driven by the number of Aim companies being taken over. Nearly a third, 23, of the delistings were due to companies being taken over in the fourth quarter, versus 13 takeovers in third quarter. Takeover activity became the leading reason for delisting from AIM in the three months to the end of December, the research shows.
Still, 22 companies had to delist in the fourth quarter because of insolvency or financial stress, but that is down from 27 in previous three months. The figure is still over double the amount that cited insolvency or financial stress as their reason for delisting a year ago.
"The increase in delistings this quarter is not wholly bad news for AIM because so many of the cancellations have been driven by takeover activity," said Charles Wilson, partner at Trowers & Hamlins.
"Some of the more recent takeovers of AIM companies have been launched by management or by majority shareholders – it is a positive sign when insiders are willing to initiate takeovers of AIM companies they are involved in."
The findings do show a worrying bounce in the number of companies citing the costs of an AIM listing as their reason for delisting, however: 14 groups left Aim in the fourth quarter, up from six in previous quarter.
"AIM is clearly not out of the woods just yet and these figures show its recovery is still quite mixed," said Laurence Sacker, a partner at UHY Hacker Young. "Sentiment about AIM has improved considerably over the last year but unfortunately investors should expect that many more AIM companies will become insolvent before the UK economy returns to its pre-recession size. There are still a lot of walking wounded out there."
A total of 498 companies have now delisted from AIM in the last two years, with 280 leaving in the last 12 months.
Is Silence golden for investors?
Silence Therapeutics looks set to become the first company off the blocks to tempt investors to part with their cash on the Alternative Investment Market (Aim) this decade. The group should get the go-ahead for a £15m placing today, when an extraordinary general meeting is due to rubber stamp a recent merger deal.
Of course, Aim is not short of ambitious biotechnology companies looking for investor backing. All claim to have cutting-edge technology that will lead to untold success.
Few, however, can point to a Nobel Prize. Silence is so-called because it uses a technique known as RNA interference, which can "selectively silence genes linked to the onset of a disease, thus leading to the creation of a new class of therapeutic products".
The placing follows Silence's merger last month with Intradigm Corporation, with the subscription of the shares priced at 23p. According to the company, a number of impressive current backers, including Alta Partners and Roche Finance, have already committed more than £5m. Nomura Code has underwritten the placing.
Silence Therapeutics hailed the merger with Intradigm as allowing the combined group to "build a competitive offering and facilitate more deals of greater value with the pharmaceutical industry". Silence will control 66 per cent of the combined company.
The group's chairman, Iain Ross, will become chairman of the combined group, while Philip Haworth, Intradigm's chief executive, will take the same job at Silence. The company will be headquartered in London.
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