The AIM market demonstrates resilience

The first six months of the year have seen the AIM market continue to demonstrate its relative strength, outperforming many other world markets. This is very much a continuation of the story of 2010, where AIM consolidated its position as the leading market for growth companies.

The first half of 2011 has seen 38 new admissions raising a total £2.8bn; June has been a particularly busy month with 13 new admissions alone raising £529m. This has led to strong trading activity in the half year with total trading turnover of £21.9bn compared to £32.7bn for the whole of 2010 (2009 - £33.7bn).

Despite these positive signs of growth, the 77 de-listings in 2011 demonstrate the obvious uncertainty in the market. However it is generally felt that the majority of these de-listings are the natural consequence of the market re-adjustment. The harsh reality is that the removal of some of the very small companies is making the remaining market a stronger, leaner and more transparent place for the rest.

Regardless of the overall resilience of the market, raising finance remains the main difficulty as fears of a US led ‘double dip’ recession seem likely to continue for some time. The 38 new admissions in 2011 have however demonstrated that with a strong track record, sound business model and experienced management team, it can be done.

Sectors driving the performance of the market

The performance however is not consistent across all sectors. Natural resources have continued to drive market performance: Mining and exploration companies alone represent 22 of the top 50 companies by market capitalisation.

This has masked the uncertainty and lack of investment in a number of other sectors including leisure, engineering and regulated businesses although Real Estate Investment & Services and General Financial Services have rallied somewhat raising £3.5m of new issues (£260.2m of further issues) and £11m of new issues (£225.9m of further issues) respectively.

If you would like further guidance in respect of a future AIM listing or would like to discuss the financial issues affecting your existing AIM business, please contact Simon Wax on +44(0)20 7556 1231 or waxs@buzzacott.co.uk.