AIM Delistings Fall
Wednesday, July 07, 2010

The number of companies delisting from London's Alternative Investment Market (AIM) dropped 18% in the last quarter compared to the first quarter of 2010.

This is the second consecutive quarter of falling delistings from AIM, according to research by UHY Hacker Young and Trowers & Hamlins, the City law firm. At the peak of the recession AIM companies were delisting at the rate of 70 per quarter.

However, the research shows that the number of AIM delistings still outnumber new listings by three to one in Q2 2010, with just 12 new companies joining AIM in Q2, compared with 36 delistings.

Charles Wilson, partner at Trowers & Hamlins comments: “This further fall in delistings is great news but everyone is going to be a lot happier when the number of IPOs overtakes the number of delistings. Parity is still a little way away.”

Wilson adds: “AIM is a global market so it is bound to take a hit from the weakness in the global market for IPOs.”

The research also shows a sudden decline in takeover activity on AIM, with the number of takeovers of AIM listed companies completed in Q2 2010 down 40% to just 12 compared to 20 the previous quarter.

Laurence Sacker, partner in UHY Hacker Young's London office says: “With AIM share prices recovering so strongly over the last year, the bargain basement prices just aren’t so available. The opportunistic M&A deals seem to have eased off a little.”

Sacker adds: “Again the slowdown in M&A deals is partly because AIM is now such a big global exchange that it is going to be impacted by global problems like the European sovereign debt crisis. AIM isn’t an obscure backwater that can be expected to be immune from the big trends in the capital markets.”

The research also reveals that the number of companies leaving AIM to join another exchange was six in Q2 2010, with four of the six companies joining the main London stock exchange.

Sacker comments: “The graduation of AIM companies to the London Stock Exchange is excellent news for AIM. The junior market is there to nurture companies, feed them capital, see them improve their profitability and move them on to a full stock market listing.”

He concludes: “This is exactly why so many companies come to AIM. They are ambitious companies that target full listing as AIM is a vital stepping stone in that development.”

The AIM launched in June 1995 to help smaller and growing companies raise the capital they need for expansion. The market opened with 10 UK companies with an aggregate value of GBP82m joining on the first day. There are now over 1,200 companies listed on the exchange worth GBP60.5bn operating in 94 jurisdictions across 40 sectors.