Number of AIM listed companies set to increase in 2012AIM shake-out almost complete |
22 December 2011
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 Thornhill, capital markets director at Deloitte, 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.”
ENDS
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