THE ALTERNATIVE Investment Market (Aim) is showing signs of a revival, but the junior market needs to attract more UK-based firms to support this return to growth, according to research out today.
The market has raised £2.8bn in the first eight months of 2010, said business advisory firm PricewaterhouseCoopers (PwC) in a report released today, though the number of firms incorporated in the UK is now below 1,000 for the first time since 2004.
Fewer than 100 companies have joined the market so far this year, down from a peak of 500 in 2005.
However, PwC claimed these drops are signs of a new vigilance in the market, which has prevented unsuitable companies from listing. “The big test of this prudent resolve and with it Aim’s credibility will come when growth begins to accelerate again,’ said Simon O’Brien, a partner at PwC.
Around one in six newly-listed business are from overseas, compared to around a third before the downturn. “[What] is clear is that Aim can no longer rely on an international presence to drive it forward and will therefore need to renew its domestic focus,” said David Snell, Aim market leader at PwC.
Aim, which has raised £70bn in the fifteen years since it began, has outperformed the FTSE index this year, in part due to a return from a starker drop during the recession. Aim All-Share has gained 22 per cent in the year to 30 September, compared to a 11 per cent rise in the FTSE All-Share.
Trades in the year to September were worth £21.68bn, according to figures from by the London Stock Exchange, suggesting trading value is on course to match 2009’s level of £33bn. However, trading volumes are set to fall below 2009’s record high, when 205.7bn shares changed hands.
PwC also claimed that Aim’s low liquidity still means investors are more likely to gain through a takeover than share price movements.
IN THE 12 MONTHS TO 30 SEPTEMBER 2010: |
AIM 100 rose by 21%
AIM All Share rose by 22%
FTSE Small Cap rose by 4%
FTSE All Share rose by 11%