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The statistics of AIM’s performance for the first half of 2008 confirm the impression generally held by professionals operating in the market, and make fairly grim reading, at least in terms of investors’ appetite for providing new equity, whether for new entrants to the market or for existing AIM companies.

The trends that were starting to become apparent at the end of 2007 are now startlingly clear. AIM has started to shrink, with the total number of companies now standing at 1,657 compared to 1,694 at the end of 2007.

The number of genuine new admissions – leaving out readmissions following reverse takeovers, and transfers from the Official List – in the first half of 2008 was 46, less than half the 106 new issues in the same period in 2007.

If the same level of activity is maintained for the rest of the year, it will fall well short of the 207 new listings in 2007 as a whole.

The reduction in new issues is matched by a reduction in the funds raised by new entrants – £904 million compared to £3.5 billion in the same period last year and £6.5 billion for 2007 as a whole.

AIM’s performance in the first half of the year has reflected the overall uncertainties in the national and international economic climate and the generally falling levels of business confidence, but anecdotal evidence suggests that interest in AIM remains high at least from potential new entrants.

INDIAN SUMMER

The LSE continues to work hard to develop international interest in AIM and scored a significant success in May/June 2008 when four Indian companies came to AIM, raising in total almost £200 million. India looks to be an area of increasing interest for AIM – 52 Indian companies are now traded on the LSE’s various markets, having raised over £2.5 billion, and London’s cadre of AIM professionals are making regular trips to India to encourage new businesses.

The most active business sector on AIM continues to be the financial sector, although that is perhaps a misleading classification as it includes equity investment funds specialising in other sectors. Almost a quarter of the funds raised in the first half of 2008 (£913m) were claimed by the financial sector. Inevitably mining and oil & gas continued to be relatively strong sectors, raising £680 million and £660 million respectively in the period.

AIM OUTLOOK

My experience suggests that smaller companies markets, while often suffering harder and sooner in a downturn, can be quicker to recover as the business environment stabilises and recovers.

The new issues market on AIM will continue to be quiet for some months, although M&A activity will continue to be strong. In the meantime Nomads and other AIM professionals are continuing to identify and work with the AIM entrants of the future and once investor confidence returns there will be no shortage of quality applicants to the market, many of them coming from the emerging international markets.

To speak to Fasken Martineau Stringer Saul LLP about AIM, contact David Smith on 020 7917 8510 or email dsmith@fasken.co.uk

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