Light Seen At End Of Tunnel For AIM
Thursday, August 26, 2010

The second half of 2010 will see London's Alternative Investment Market (AIM) bottom out with 1,200 companies listed, according to analysis by Deloitte, the business advisory firm.

Following 30 consecutive months of declining numbers of companies on the junior market, Deloitte experts predict that the market will reach its lowest point before the end of the year but then start to grow again, kick-starting activity into 2011.

Richard Thornhill, capital markets director at Deloitte, comments:

“The past six months have displayed positive characteristics compared with those seen this time a year ago, with a definite uptick in the numbers of companies listing. There has been a steady increase in the levels of activity with Q2 of this year seeing 18 new listings, compared with just eight in the same period last year. This is an increase from the 16 new admissions we saw in Q1. This has coincided with the rate of companies leaving the market slowing in recent times, meaning that we may shortly see an end to the long decline in the number of listed companies on AIM."

“Trends in recent activity suggest that only once the total number of companies reaches the 1,200 mark, a drop of almost 30% from its peak of 1,694 in December 2007, will the numbers of companies listing and level of activity rebound and begin to increase again."

“The point at which this low watermark is reached and the market is subsequently perceived as returning to growth will clearly be a positive development for the AIM market, and will herald increased levels of confidence for investors and companies alike, proving a positive indicator at the start of 2011."

In July, research by UHY Hacker Young and Trowers & Hamlins, the City law firm showed that the number of companies delisting from the AIM dropped 18% in the second quarter compared to the first quarter of 2010, the second consecutive quarter of falling delistings from the market. At the peak of the recession AIM companies were delisting at the rate of 70 per quarter.

However, the research showed 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.

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 (USD93.5bn) operating in 94 jurisdictions across 40 sectors.