AIM shrugs off Brexit fears

The firm said it found that the number of companies leaving AIM has dropped by 16 per cent in the last 12 months, falling from 105 in 2015/16 to 88 in 2016/17.

The number of companies joining AIM meanwhile has risen by 5 per cent in the same period, from 38 to 40, whilst money raised in IPOs on the junior market has jumped from £753 million to over £919 million.

The market’s apparent improved performance comes despite fears of increased uncertainty amongst investors since the Brexit vote.

The firm said the strong performance of AIM since Brexit is partly down to its exposure to the global economy, as opposed to UK economy.

Laurence Sacker, managing partner of UHY Hacker Young’s London and Nottingham offices, said: “Trends such as commodity prices or growth in tech valuations is more of an influence on AIM than what is happening at the small companies end of the UK economy- that gives it protection from the worst of Brexit volatility.”

In terms of new IPOs, AIM’s improved performance is partly due to the fact that appetite among investors for growth investments has not been significantly diminished by Brexit, the firm said.

The nascent recovery also appears to be underway in the oil & gas sector, with nearly a quarter of new listings on AIM in the last 12 months coming from this sector.

Notable businesses joining and leaving the market in the last 12 months include:

Mr Sacker added: “AIM’s performance highlights its resilience in the face of uncertainty.

“The number of new listings, as well as the drop in the number of companies exiting AIM, shows London’s junior market is robust.

“The market is still a way off its strong performance on capital raising of a few years ago – but it is clear that Brexit related fears have not caused any major setbacks for AIM.

“The oil & gas sector has faced headwinds in the last few years, however the trend in new listings indicates that it is over the worst. Entrepreneurial oil & gas companies are benefiting from the asset sale programmes many of the major are undertaking.

There is also relief that the worst fears over what the London Stock Exchange’s prospective merger with Deutsche Börse meant for the future of AIM have been put to bed.

Laurence continues “The end of the LSE Deutsche Börse deal lifts a cloud off the market as a whole, and AIM market participants can feel more secure in its future.

“Future Brexit negotiations may have an impact on the market, but increasing the number of overseas IPOs on AIM will soften that.”