Aim fundraisings suffer a setback as investors shy away from risky business

LONDON’S Alternative Investment Market (Aim) suffered a blow in the first quarter of 2010 as the total value of funds raised on the market took a further tumble.

£247m was raised by 17 companies on Aim over the first three months of the year, 38 per cent below the £396m that was raised in the fourth quarter of 2009, according to business advisory firm Grant Thornton.

The drop came despite encouraging year-on-year statistics for the junior market, with the value of funds raised in the first quarter of 2010 coming in 82 times higher than in the first quarter of last year, when just £3m was raised by four companies.

But this year’s figure is also a far cry from the money which poured into Aim company coffers in the boom times, before the pressures of the financial crisis caused investors to take fright at the risk involved with investing in growth companies. The first quarter of 2007 saw over £1.1bn raised by 54 companies on the market.

“The main problem is the valuation gap,” said Philip Secrett, a partner in Grant Thornton’s capital markets practice. “Entrepreneurs are holding out for pre-crunch valuations while institutional investors continue to be very risk averse and seem to be holding out for bargains with a positive track record as well as outstanding growth prospects.”