Cost of listing on AIM up despite IPO slump
New research blames “highly charged” regulatory environment
The cost of listing on the Alternative Investment Market (AIM) continued to rise last year despite a slump in the number of initial public offerings (IPOs), according to research released today.
Accountancy firm UHY Hacker Young and law firm Trowers & Hamlins said that the cost of listing reached an average of 7.24% of all funds raised in 2009, up from 7% in the previous year.
The increase in professional costs is despite a 66% fall in the number of AIM IPOs, down from 38 in 2008 to 13 in 2009.
The firms said that the rising cost of listing is due to a “highly charged” regulatory environment which means that professional advisers, such as Nomads, have had to subject AIM candidates to ever greater levels of due diligence.
Laurence Sacker, partner at UHY Hacker Young, said: “Fears over regulatory retribution if an AIM IPO goes wrong is a bigger driver of the costs of listing on AIM than the desire amongst advisers to win AIM work by competing on price.
“Advisers are becoming ever more meticulous in their work and this has made it harder to keep costs down.”
Charles Wilson, partner at Trowers & Hamlins, added: “A greater emphasis on regulation over the past 24 months has driven up costs to the point where it risks making listing on AIM less attractive to some companies.
“In order for AIM to remain competitive on an international stage, against the likes of NASDAQ and EuroNext, it is vital for it to once again achieve the right balance between regulation and cost.”
Wilson said that while the sample size of IPOs is much smaller this year, the increase in costs shouldn’t be “shrugged off” since it “may deter some companies from listing”.