The number of companies leaving AIM fell by 44% during the last year, which indicates that the market is returning to normal, two leading law and accountancy firms have suggested.
The research from Trowers & Hamlins LLP, the City law firm and UHY Hacker Young, the accountancy group, has suggested that AIM is reaching a turning point in its return to normality with an influx of new issues and a sharp fall in the number of delistings for 2010. The number of companies leaving AIM fell from 280 in 2009 to just 157 last year.
Charles Wilson, partner at Trowers & Hamlins, said: “AIM has taken a real beating over the last two years, but has weathered the storm nicely and could well emerge stronger than it was before the financial crisis.”
During 2010, the number of new listings more than trebled, up from 18 in 2009 to 65 in 2010, however the total money raised by these new listings rose more slowly, up from £610m in 2009, to £1.0bn in 2010.
According to the report, the main reason for delisting in 2009 was financial stress and insolvency at 34%, whereas in 2010 mergers and acquisition activity was the top at 44%.
Laurence Sacker, partner at UHY Hacker Young, said: “AIM is certainly heading in the right direction. Delistings appear to be stabilising, while the upturn in IPO and new issue activity is encouraging. However, the market’s return to optimism is tempered by a lot of caution - conditions are not yet what you would call buoyant.
“There has been an influx of new listings, but the amount of new money raised has not quite kept pace. At the same time, further issue activity has been strong – reaching £4.5bn by the end of November, which suggests that investors are backing only a few new businesses, preferring to stick with those they know well. ”
© Crimson Business Ltd. 2011