AIM de-listings rise by 20%
Financial stress and insolvency leading cause of de-listings, with uncertainty surrounding Brexit and low oil prices also taking their toll
The number of companies de-listing from AIM has risen by 20% to 107 in the last year – up from 89 the year before – according to UHY Hacker Young.
Financial stress and insolvency was cited as the leading cause of businesses quitting AIM, responsible for 30 departures from the junior stock market in the last year, with another 33% leaving due to the impact of low oil prices damaging the profitability of companies in the sector and making it harder for new firms to raise funds.
Uncertainty surrounding Brexit has also made it harder for companies to raise funds, while the UK’s main stock market has also seen a drop in the number of IPOs over the summer.
Meanwhile, only 41 new companies listed on AIM over the last year, a decrease of 29% on the 58 that listed in the previous 12 months. This has resulted in a net drop of 66 companies listed on the junior stock market – the ninth consecutive year it has shrunk.
Laurence Sacker, partner at UHY Hacker Young, commented: “AIM faces a double whammy – just when it needs new blood in the form of IPOs, the number of companies choosing to float on the junior market is dropping.
“All told, it’s been a challenging year for AIM, but it’s not all doom and gloom. There have been signs of investors regaining confidence in the UK market. Many investment banks and Nomads predict an uptick in the number of IPOs in the coming year.
“It’s entirely possible that this rising tide will lift AIM. There has been an increase in interest from overseas, with investors attracted to the weaker pound, and the domestic economy has started to recover from its post-Brexit jitters.”