London’s Alternative Investment Market (Aim) remains by far the biggest growth stock market in Europe despite falling numbers of floats and questions over regulatory standards, new analysis has shown.
In the year ending in September, £3.9bn of capital was raised on Aim in company floats and secondary fundraisings compared to just £1.9bn raised on the next four biggest growth markets such as Sweden’s FN Stockholm, accountancy firm UHY Hacker Young said.
The figures demonstrate the difficulties Aim’s European rivals have had in challenging the London Stock Exchange’s (LSE) smaller market even as it suffers a series of setbacks.
Aim is on track for the lowest number of initial public offerings (IPOs) in its history this year. Only 20 companies have floated so far compared to 65 last year and a high of 519 in 2005, according to LSE figures.
Brexit uncertainty and a slowing global economy are two factors driving the fall in floats. Smaller companies are also increasingly reliant on private investors to fund their early-stage growth.
Earlier this month, Scott McCubbin, professional service firm EY’s UK IPO leader, said: “The possibility of a UK General Election could hugely derail plans and push potential issuers to postpone until 2020, to lower the risks of execution.”
Aim has also attracted negative attention in recent months for what some critics say are its low regulatory standards. The issue came into the spotlight last month when a short-selling attack against Buford Capital, one of Aim’s biggest stocks, by a firm that strongly criticised its accounting and governance.
London’s alternative market has defended itself against these criticisms, however, saying its rules are less prescriptive but still of a high standard.
Today’s figures showed that Aim remains well ahead of its competitors on the amount of capital raised, even as the number of IPOs declines globally. Compared to Aim’s £3.9bn, companies on FN Stockholm raised £1.1bn in the year to September, while those Spain’s Madrid Alternative raised £325m.
Laurence Sacker, managing partner at UHY Hacker Young, said: “Aim’s reach amongst institutional investors and ability to meet funding needs means the needs of most companies are very well served.”
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