It was also encouraging to hear how the member firms had worked together throughout the year, ultimately improving the service offering for clients who were expanding or doing business in foreign territories. (David Riley has written a blog
providing a general report).
David Cox and I, as members of our corporate finance team, gave a short presentation to the delegates with David covering merger & acquisition activity in the UK during the year (see his blog here) and me providing a snap shot of AIM and activity on the market since the start of the year.
AIM market statistics
I started by providing some statistics on the AIM market:
• The number of companies listed fell from 1,694 in 2007,to 1,550 in 2008 and to 1,293 by end of 2009
• The number of de-listings in 2009 was 293 and in 2008 it was 259
• But things are looking up….32 companies listed on AIM up to end of September 2010 and number of de-listings has slowed
• At the end of September 2010 there were 1,204 companies listed on AIM
• AIM outperformed comparative markets in 12 months to September 2010
Why AIM?
We briefly covered the reasons why a company may embark on an IPO on to AIM, which included funding future growth and expansion, providing an objective market valuation, to fund acquisitions and increase credibility and status amongst investors, customers and suppliers. AIM provides a market offering to smaller, growing businesses. There is no minimum size criteria and no track record requirement and it has a more balanced approach to regulation than a listing on the LSE.
Things that make an AIM IPO (Initial Public Offering) more likely to succeed include a fast growing, debt free company with an experienced management team that has a clear strategy based on a sound understanding of the commercial and financial risks. It is also important for the fund raising process to obtain an accurate valuation, that the right professional advisers are used and that there is commitment from all parties.
What sort of companies are on AIM?
In the 32 admissions up to 30 September 2010 there were:
– 5 mining companies raising total of £84 million
– 3 in software and computer services companies raising £78 million
– 2 in business support services firms raising £70 million
– 1 in building materials raising £49 million
In this period the largest fundraise was in private equity turnaround specialists (Sherborne Investors), raising £105 million. But out of favour at present appear to be real estate and general financial services.
AIM attracts foreign companies
Overseas companies represent approximately 19% of total companies listed on AIM at September 2010 and this percentage has remained fairly stable over the last three years. Whilst we are encouraged by the stability, we hope to see an increase in overseas companies looking to tap into UK investor funds.
Amongst the international companies are:
– Ienergizer Limited (India) raising £37 million
– SKIL Port & Logistics (India) raising £76 million
– Kea Petroleum (New Zealand) raising £6 million
– CFS Group (Malaysia) raising £28 million
The presentation did raise many discussion points amongst the delegates and it was interesting to hear that, before the presentation, many had heard of AIM but did not know a huge amount about the market and how credible it was in the UK. We hope that the delegates were given a reasonable insight into AIM, fundraising opportunities in the UK and also a flavour of the mergers and acquisitions activity that we have seen since the start of the year.