New Listings On AIM Fell In 2007

by Amanda Banks, Tax-News.com, London

08 January 2008

The value of new companies listing on AIM fell for the first time in five years in 2007, although secondary issues continued to show strong growth in a year characterised by an impressive mid-year performance and a disappointing final quarter, according to the latest research by Grant Thornton Corporate Finance.

The value of new issues on AIM in 2007 was GBP6.5 billion, a drop of more than a third (35%) on previous year, while secondary issues grew by at least 50% to GBP8.628 billion, a marked reversal on the pattern during the past decade.

In total, AIM was estimated to have raised primary and secondary issues of more than GBP15 billion by the end of the year, equalling 2006's final figure of GBP15.678 billion.

"This is the first time in five years that the value of IPOs on AIM has not grown by at least 50% year-on-year, and so despite seeing several records broken in 2007, including the most funds raised in a month this June, overall it has proved to be a disappointing year in terms of growth," explained Philip Secrett, International Director of Capital Markets at Grant Thornton.

The volume of new companies listing also dropped to 275 this year from 462 in 2006, and at year end there were a total of 1,689 companies on AIM, a net gain of just 55 companies year-on-year.

Secrett suggested that this pointed to the trend of less companies raising greater amounts, which was now something of a concern for a market set up to cater to growth companies, rather than competing for size with the smaller end of the Main Market.

Meanwhile the largest fundraising totals, both primary and secondary, were down to the ongoing popularity of property and private equity funds this year.

"Property funds and private equity funds, under the sub sectors of real estate and equity investment instruments, continue to represent over almost half of all new issue cash raised (48%), allowing real estate to retain its place as one of the largest constituents on AIM," continued Secrett.

"While AIM can still firmly claim its place as the most successful growth market in the world, the first half of 2008 at least will see fundraising levels similar to the final quarter of 2007, with many companies in sectors including mining and technology simply postponing an IPO until market conditions improve."

Secrett went on to predict that a major improvement in macro-economic conditions would likely set about a wave of new issues, as the there was still a "huge amount" of interest in AIM around the globe, although the competition from other trading markets, particularly those in developing economies, would continue to be an issue for AIM.

"Domestic markets within the countries that have been particularly active on AIM, such as India and China, will be making a stronger case for their own fast-growing businesses to raise finance at home, and it is true that the growth these markets are seeing does make them more attractive than the past." Secrett concluded.

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