Sustained activity levels in the final quarter of 2005 have seen
AIM complete another record year in terms of new issues to the market and money raised, according to research by Grant Thornton Corporate Finance. 2005 almost matched the total amount raised in the past five years combined.
During 2005, a total of 511 companies were admitted to trading on AIM, an increase of almost 45% (from 355) on the previous year. All new listings raised over £6.3bn*, an amount which is 133% higher than the £2.7bn raised during 2004 and almost six times the amount raised in 2003.
Specifically looking at the performance achieved during the fourth quarter of 2005, AIM saw the listing of 125 companies (112 in Q3 2005 and 118 in Q4 2004) and a fundraising of over £1.9bn* (£1.25bn in Q3 2005 and £917.1m in Q4 2004).
"Yet again, as in 2004, AIM has exceeded all market expectations and made it the most successful growth market the world over. More companies joined the market in 2005 and larger sums of financing were raised than ever before," says Philip Secrett, a partner at Grant Thornton Corporate Finance. However, warned Secrett, "this voracious growth is not going unnoticed and calls for a restructuring of the market are getting louder."
This year marked AIM's 10th anniversary, and the money raised in the primary market pointed to an increasing level of sophistication among investors. AIM continues to succeed in attracting international companies thanks to 119 joining during 2005 meaning that AIM's international contingent has now increased by 92% (compared to 2004) to reach 223 companies. "AIM's international strategy has taken off thanks to the designated market rules, introduced in 2004, designed to facilitate international admissions. However, as many such international companies are resource biased, the challenge for the market will be to broaden London's appeal to a wider range of sectors" said Philip Secrett.
"We can expect to continue to see signs of the Exchange putting breaks on AIM's rampant growth to realign the interests of investors with the companies listed on the market. Some form of restructuring could be in the offing", speculated Secrett.
"Looking ahead, while we expect the vibrant growth rate to
continue, 2006 is likely to pose many new challenges for AIM. Its two main challenges appear to be managing the growth of its own success and staving off any additional pressures from additional regulation or changes to its current tax breaks."
However, that should not prohibit stellar levels of growth argued
Secrett. He continued, "The change to the rules for cash shells
will mean there will be a cull on companies in April, but this will
not destabilise the market. More likely though, the runaway success could mean entities such as the FSA or HM Treasury review certain policies or investor incentives. However, I doubt any interference with the market would risk seriously undermining the market or increase the market's susceptibility to economic changes."
The more generous income tax reliefs to Venture Capital Trusts are currently due to come to an end in April 2006. The Chancellor may be looking at other methods of sharing the spoils of the success of the market to ensure the tax reliefs are in line with the
Treasury's own projections, claimed Secrett.
