AIM migration increases while de-listing slows
THE number of companies leaving junior stock market AIM is slowing, according to research.
Analysis by business advisory firm Deloitte shows that although there is a continuing exodus the rate of flight has slowed markedly.
The research also showed a noticeable increase in the number of firm moving up from AIM onto the main market in the past two years.
The number of companies leaving AIM increased from 210 in 2007 to 258 in 2008, and 178 to July this year.
However, the number of companies leaving AIM to join the main market has increased from three in 2006 to eight in 2007 and 11 last year.
In 2006, 4% of all companies listing on the main market were joining from AIM, in 2007 this increased to 11%and by 2008 had reached 21%.
In 2009, so far there have been only four (out of nine new admissions) move ups.
Roger Esler, plc advisory partner at Deloitte’s Leeds office, said that AIM had had a “pretty bad rap” over the past 18 months but that there were strong signs that at the top end of the market it has been successful in doing what it set out to do when launched.
“While there has been a considerable fall out at the bottom end of the market – unsurprising following the over exuberance to join AIM at the height of the market, resulting in too many poor companies jumping on the bandwagon – at the top there is a steady and growing number of companies whose success on AIM has proved a springboard to move up to the main market,” he said.
“”There are a number of other AIM to main move ups currently in progress and, while they may not all occur this year, the trend is pretty clear. Most of the activity is in the oil and gas and mining sectors, where improving oil and commodity prices have meant many of these companies are either outgrowing AIM or want the added lustre of a main market listing.”
However, Mr Esler said that part of the drive to move from AIM may be less positive.
“Arguably, part of the rationale of moving to the main market is that AIM still struggles to provide liquidity, at least at the lower end of the market, and valuations have taken a bigger beating,” he continued.
“Nonetheless, whether the reasons are positive or negative, we expect the current trends of departures to continue as businesses reappraise their capital structures in the current environment.”
