In last week's column, we reported on something of a spat between two law firms, Hammonds and Cobbetts, which had fallen out about the former offering a £5,000 one-stop shop for Alternative Investment Market (Aim) delisting.
Cobbetts, going to lengths to stress that they were not annoyed because they had not thought of it first, argued that their rivals were making it too easy for companies to leave the market and that firms that took Hammonds up on its offer of the Aim equivalent of assisted suicide would be doing their shareholders a disservice.
Sadly for Cobbetts, they seem to be swimming against the tide if research released last week is to be believed. According to yet another law firm, Trowers & Hamlins, and their colleagues at the accountancy firm UHY Hacker Young, the rate of companies abandoning Aim is multiplying at a rate of knots. The number of companies delisting from the market has jumped by 33 per cent in the last year, from 218 to 290 companies. Worryingly, the rate seems to be increasing, with 77 AIM delistings in the first quarter of 2009 compared with just 45 in the same period in 2008.
The research throws up some other interesting findings. Under Aim rules, each company must have a nominated adviser, or Nomad, acting on its behalf. While lots of companies are delisting because of the recession or because of share price illiquidity, the research shows that 70 companies left Aim in the last year because they cannot find a Nomad.
"There is the worry that Nomads may be deciding to resign because they see the legal, regulatory and reputational risks involved in continuing to advise that company as being too high. They worry that if a company they advise goes under, they may face the regulator's and investors' wrath," said Charles Wilson, a partner at Trowers & Hamlins.
Coal of Africa deal should boost stock
About 18 months ago, miners on the AIM market could not help but do well. Investors were falling over themselves to pile the cash on hitherto unimpressive companies, driven by the high, and seemingly immovable, commodity prices.
But oh, how times have changed. As demand for commodities has slumped, driven largely by the recession, many of these miners have found calls to investors unanswered.
Coal of Africa, the South Africa-based coal miner, would argue the conditions do not necessarily apply to them. There was a change in the group's register last week when ArcelorMittal South Africa, the subsidiary of the Luxembourg-based steel producer, bought its parent's 16.3 per cent stake in Coal of Africa for R404.5m (£30.3m).
The deal includes an option to enter into a take-off agreement under which Coal of Africa would supply 2.5 million tonnes of coal each year to its new shareholder, largely securing all of ArcelorMittal South Africa's coal needs. The experts at Evolution reckon the investment will boost Coal of Africa's stock, arguing the longer-term share price is 155p, against 50.5p at the close of trading last week.
Turning point for battered junior markets?
The bad news about investing in AIM-listed companies has been hard to shake off, but while we would confess that this column has hardly helped, the news is not all bleak.
One of the first to raise their head above the parapet is Robin Boyle, the managing director of Athelney Trust, which invests in small-cap groups on AIM and other such markets.
According to Mr Boyle, the time is nigh for investors to take advantage of the depressed share prices of those on the junior markets. "Now the odds are in our favour. Goldman Sachs reckons Wall Street is around 32 per cent below 'fair value' and 58 per cent below its 'equilibrium level', the latter assuming a return to normal risk acceptance. Today's prices may not be absolutely rock bottom, but they do provide a healthy margin of safety for patient investors."
Mr Boyle may be one of the first to argue it is time to get back into the small-cap sector, but given that markets like AIM are predisposed to follow their larger-cap relations, which have shown a gradual improvement in the last few weeks, others may soon be joining his chorus.