Significant improvement over 2009, but still well off its peak

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AIM bounced back in 2010 with its index increasing by 43%, whilst the FTSE 100 only increased by 8%. Secondary fundraisings held up well at £5,738 million (£4,861 million in 2009) demonstrating the maturity of AIM as a growth company market with considerable support by investors for existing listed companies. 

Whilst IPOs increased significantly to 47 (13 in 2009), underpinned by 26% in the resources sector, this level is still a far cry from 2006 when there were 326 IPOs. Only the very best companies were able to complete an IPO as institutional investors, often with reduced funds available, preferred to support their existing portfolio companies or seize opportunities with other companies already listed.

Smaller, weaker companies continued to delist and the total number of companies on the market again fell, albeit at a lower rate to 1,195 (1,293 in 2009). The average market capitalisation increased, however from £44 million to £66 million, yet again demonstrating a more streamlined but arguably stronger AIM market.

Despite a year of continued economic hardship and investor caution we are pleased to see positive results in this year’s Taking AIM survey from both companies and investors, in particular:

• the vast majority of current AIM-quoted companies (71%) support the market, saying that, if they had known about the recession, they would still have joined
• 80% of investors said AIM’s performance during the year had a positive effect on their own fund’s performance
• 80% of AIM companies say they have seen some benefit from the access to capital their listing provides, with 48% considering this to be a major benefit
• 56% of AIM companies said they had considered, or were considering, AIM for further fundraising in the next 12 months

Has potential and can already see improvements for the second half of 2011

2011 has started in much the same vein as 2010, but with increased geopolitical risk across the world. Most advisers are seeing a greater number of companies seeking an IPO, which is not surprising; we are now in the fourth year of recession and with banks still not widely open for business, companies which seek to develop further are likely to look to the equity markets for new funding. Whether this increased demand will be matched by investor appetite is still uncertain.

Our survey shows that 60% of investors and 63% of AIM companies expect to see further improvement in AIM’s performance over the next 12 months.

In the context of the future of AIM, we are delighted to see that, in the March 2011 Budget, the Government has clearly listened to SMEs, the London Stock Exchange and the adviser community, including ourselves, and announced plans to improve considerably the VCT and EIS legislation. The improvements will mostly only arise from 6 April 2012, but they will nevertheless provide a welcome benefit to qualifying AIM companies which seek to raise new funds.

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