Small Talk: Aim market is showing life as delistings fall

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The Independent Online

This column has been quick to point to the shortcomings of the Alternative Investment Market (Aim) in recent months, specifically when those groups that depend on investor funding for projects faced a hiatus of liquidity at the height of the credit crisis. In most cases, those groups had been attracted to Aim after promises of easy funding and plenty of supportive investors, most of whom did a runner when the likes of RBS started to wobble.

However, credit where it is due. There are signs that conditions for small-cap companies are improving on Aim and the flood of companies leaving the market after deciding they had had enough of paying fees for a coterie of bankers, brokers, lawyers and public relations folk, has now slowed to its lowest level for 18 months.

The number of companies delisting from Aim in September fell to just 15, the lowest monthly total since March 2008, according to research from law firm Trowers & Hamlins and UHY Hacker Young, the accountancy group. Monthly delistings peaked in December 2008, when 40 companies left. A total of 527 firms have departed the index since the onset of the downturn two years ago.

"The sharp fall in overall delistings, particularly in the last month, is a significant sign of recovery in both the fortunes of Aim-listed companies and in that of the Aim market as a whole," said Charles Wilson, a partner at Trowers & Hamlins.

The research also reveals that the number of companies delisting in the third quarter of this year, because they could not find a "nominated advisor" (Nomad) fell by 67 per cent to just five, from 15 a year earlier. Aim says companies must retain a Nomad at all times.

"The banking crisis started the clock running on many Aim delistings when their Nomad ceased operating," said Laurence Sacker, at UHY Hacker Young. "Nomads shed clients they no longer saw as profitable... Some Nomads collapsed which left other Aim-listed companies adrift."

Bluewater stays private

As ever with Aim over the last couple of years, it is rather a case of two steps forward and one step back.

Daniel Ishag, the chief executive of Bluewater Bio International, a water treatment group, decided that with bills of £400,000 a year just to be a listed company, a falling share price and investors that preferred to back a private company, it was time to leave Aim in November last year. It is not a decision he is regretting.

Since coming off the market, Bluewater Bio has been through two fundraising rounds, one bringing in £2.5m at 12.5p a share and another raising £2m at 15p. The group's last share price before its de-listing was just 7p.

Mr Ishag says that over the last year, particularly last winter when stock prices were collapsing all over the place, institutional investors were not interested in backing public groups, but were happy to put money into private companies.

For now Mr Ishag says he is very happy running one of them. However, it is worth noting that he does not rule out a return to Aim for his company in the future.

LXB sees the time as ripe to join Aim

Staying private may suit some, but a number of new groups are seeing sufficient green shoots to think that now is the time to join Aim.

LXB Retail, a newly formed real-estate investment group, which plans to invest in out-of-town and, as they put it "edge-of-town" (whatever that means) retail assets, announced on Friday that it plans to list on Aim, and on the Channel Islands stock exchange.

The group reckons that there is a "structural change occurring in the UK out-of-town retail sector" – where much of the population spends Saturday and Sunday afternoons. It plans to take advantage by investing in, and buying, retail parks.

The sums assume that investors are again flush with cash. The group is looking to raise as much as £100m on Aim. More may come from the secondary listing in the Channel Islands.

"This is an extremely exciting time for UK retail. We see huge opportunity to capitalise on the changes taking place within the retail parks sector," said LXB's chief executive Tim Walton. "Cyclically, values are at a low point, and there is the prospect of the numerous leases signed in the late 1980s coming up for renewal.

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