Aiming for the exit

Janice Warman

Aim, Britain’s junior market, is suffering an exodus of companies as the recession worsens and investment opportunities dry up, says Janice Warman

It would have been foolish to think that the Alternative Investment Market could escape recession’s onslaught. Britain’s junior market is under enormous pressure as companies strive to reconcile the high costs of remaining listed with their struggles to stay solvent. It was the UK’s worst performing market in 2008, losing 63 per cent of its value against 31 per cent for the FTSE 100.

Yet it remains the most successful growth market in the world; it has raised £60 billion since its launch in 1995, when it featured just ten companies. And a survey by Baker Tilly revealed that even last year, there were 38 IPOs on Aim – more than the other UK markets with 35, and ahead of the much larger Nasdaq with 24. However, it has suffered a dramatic fall in membership. Since January 2008, 258 companies have delisted, while more than 800 Aim-listed companies now have a market capitalisation of less than £10 million, with 400 valued at less than £5 million.

‘There is a crucial lack of liquidity in the Aim market,’ says Sue Hoppen, financial director of Motivcom, an Aim-listed marketing services company whose blue-chip clients include one third of the FTSE 100 index, including Land Rover, Norwich Union, Barclays Bank, Scottish Widows and Virgin Media.

‘A major reason is that most institutional investors only look at companies with a market capitalisation of over £100 million. Getting money from the institutional investor is very hard to do; we actually came to the market to be able to raise money and that route obviously is dead.

‘I guess a lot of people are questioning why they are on Aim. Many say what perhaps will happen is that people will go to Plus [another specialist British market for small-cap shares] and the main market. Certainly many companies are leaving Aim.’

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