Companies aim away from junior market flotations amid Brexit uncertainty

 
William Turvill
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Inside The London Stock Exchange
Aim turned 21 earlier this year (Source: Getty)

The London Stock Exchange’s alternative investment market (Aim) has shrunk by 60 companies in the last year, according to new research.

In the year to June, there were 40 new entrants onto the market, while 100 exited. In the same period across 2014 and 2015, there were 70 new listings and 100 delistings.

UHY Hacker Young’s research also found the latest 40 initial public offerings (IPOs) raised £721.6m, down from £1.2bn across the previous 70.

Read more: What Brexit means for the UK's IPO market

“Resources companies are continuing to rapidly exit the market and the uncertainty caused by Brexit means there isn’t a steady flow of companies joining Aim,” said UHY’s managing partner Laurence Sacker.

“A difficult year for IPOs has been intensified by the shadow of the EU referendum looming over the UK. Companies have been reluctant to list on Aim with the possibility of Brexit and many have been forced to exit the market after struggling financially.”

He added that with Brexit causing further uncertainty, there will be more reluctance from new companies to list on the market.

Read more: Italian PR outfit sets sights on UK with plans to float on Aim

An LSE spokesman said: "The quality of companies listing on Aim, the amount of money they have raised and their post IPO performance – which has out-performed the main market recently – all show Aim is a successful growth market, unique in the world.

"As for high turnover, that is, by definition, a feature of successful growth markets. Dozens of companies have left Aim but for positive reasons like M&A, reverse takeovers and transfer to the main market."

After the result of the referendum emerged, a report from accountancy firm EY suggested that companies are putting flotation plans on hold. IPO Eye noted there were “subdued levels” of activity in the run-up to the vote.

Scott McCubbin, EY’s IPO leader for UK and Ireland, said: “Raising capital is likely to be more difficult in this environment. IPO activity was already slow across the UK due to a wide range of economic and political uncertainties.

“Following the result of the EU referendum we expect UK IPO activity to slide further to a near-standstill in the next 12 months as investors absorb and process the changes to the UK economic landscape.”

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