Activity levels on Aim remain strong despite difficult market conditions and a decreasing number of ...
Activity levels on Aim remain strong despite difficult market conditions and a decreasing number of new participants.
The number of Aim flotations has fallen from 277 in 2000 to 177 in 2001 and 158 in 2002. There has been a corresponding decline in the amount of money raised from flotations, dropping 17% over 2002, from £593m to £490m.
However, the market has seen a slight increase in reverse takeover activity, with 40 deals completed last year compared with 33 in 2001. There has also been a small increase in the number of transfers of companies from the Official List to Aim from 35 to 40, representing a growing proportion of total Aim admissions, up from 20% in 2001 to 25% in 2002.
As a result, Aim can probably still consider itself one of the leading markets for smaller companies, especially considering the announcement of the demise of the German technology Neuer Markt.
Philip Secrett, a partner at Grant Thornton Corporate Finance, says: 'Aim is still outstripping all other European growth markets and continuing to grow in credibility. Last year was undoubtedly tough for the market but not nearly as tough as the year experienced by many other European growth bourses. A flat economic environment contributed to a more general deterioration in investor confidence in the public company arena.'
The fourth quarter of 2002 was quiet on Aim, although Secrett highlights the admission of Epic Brand Investments with a £50m fundraising onto the market. Undoubtedly Aim is not immune to destabilising factors such as the possibility of war in Iraq, predictions of a drop in house prices and possible further instances of industrial unrest. But Secrett predicts the opportunity for companies to raise funds and achieve valuation expectations through flotation in 2003 will continue.
Aim is often dogged by the perception it is an information technology market, which is unfortunate as many other sectors have representation.
Max Audley, partner at lawyers Faegre Benson Hobson Audley LLP, says: 'We have advised on several biotechnology deals in the past 12 months, including the flotation of BioProjects International plc and the reverse takeover of Greenchip Investments Plc.
'The flotations of Clean Diesel Technologies and Ringprop Plc, (fuel technology and nautical propulsion technologies respectively) were received very well.'
The problem for Aim stocks is that even if they do well, it is not always reflected in the share prices. Bill Brown, head of small caps and manager of Isis Aim Trust, says: 'The market is stock specific. You cannot say this sector is doing well compared to that because the companies are all at different stages of development; it is how they are performing against their own business plans.
'Some companies have done well but have not got the credit for it. There are profitable companies that are generating cash but they just have not got the uplift.
'At the same time, there are a lot of companies that maybe should not have joined the market when they did as their plans have not worked or developed as well as they hoped.'
Returns are stock specific.
Reverse takeovers on the rise.
Aim building reputation as leading market.
‘Important to have an anchor’
Report to be written by TPR
Lack of innovation for solutions
Some 2,000 consumers affected