Junior market growth returns after six years

Michael Bow
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THE JUNIOR stock market grew for the first time since the onset of the financial crisis last quarter thanks to a bevy of small companies tapping the market for cash, according to new figures out today.

A total of 20 companies listed on the Alternative Investment Market (Aim) in the 12 weeks ending September, versus just 16 firms de-listing, giving the market positive growth for the first time since the third quarter of 2007.

A host of firms, including trading platform Plus500, off-licence brand Bargain Booze and game designer Frontier Developments, have all contributed to the increase.

“Aim has struggled through some very lean years since 2007, with a lot of businesses shelving their initial public offering (IPO) plans,” said Laurence Sacker, partner at UHY Hacker Young, which carried out the research. “These figures show that more companies are again looking at an Aim IPO as an opportunity for growth.”

The volume of cash raised by companies on Aim has also risen 70 per cent over the past 12 months, with 56 companies raising £881m in the year ending September 2013 up from £520m in the previous year. However, it is in stark contrast to the pre-financial crisis highs of 2006-07, when £8.8bn was raised though alternative floats. Since then, the rate of companies leaving the junior market has steadily outpaced the number of firms, largely driven by the credit squeeze after 2007 curtailing capital markets. A total of 35 companies quit the market during the first few months of last year versus eight who joined it, the figures show.

However, the upturn in listing this quarter could bode well for future growth in the market. “2014 could turn out to be a real bounce back year for Aim, although getting back to the level of new listings we saw during the boom years remains a pretty remote prospect,” he said.

A host of government reforms, including abolishing stamp duty on Aim shares and permitting the inclusion of Aim shares in ISAs, as well as renewed optimism from investors, are likely to help drive the growth. Chancellor George Osborne announced plans this year to abolish stamp duty on shares listed on Aim effective from April 2014.

Rules permitting Aim shares to be included in ISAs came into effect in August.