The current economic instability has led to AIM hitting its lowest level of activity in three years, according to quarterly figures by business advisory firm Deloitte.
John Hammond, capital markets partner at Deloitte, said: “The worst of the downturn was expected to hit AIM in the second half of 2007, but a flow of IPOs in the pipeline kept the overall numbers afloat. Figures for 2008 show, however, that the trickle has dried up with a 60% drop in new fundraising.”
Hammond said January was the lowest month since 2004, and the slump in AIM activity demonstrated how sensitive alternative investments were to economic downturn.
He added: “The AIM index has declined by around 20% compared to a fall of 10% in the FTSE as institutional investors switch from riskier investments to blue chips.”
However, the blow to fundraising has not affected listings on AIM, the figures suggested.
“Of the 32 companies that were admitted to AIM in the quarter, half were transactions that involved no fundraising at all,” said Richard Thornhill, capital markets director at Deloitte.
“There is good reason for such an approach: while it might be difficult to access capital at the moment, those companies that are listed will be in a good position to move quickly when conditions change.
“Those companies that can demonstrate successful trading results as a listed entity will be in a particularly advantageous position.”
© Crimson Business Ltd. 2008
