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AIM remains strong despite global market turmoil

Tuesday, November 13, 2007

Global stock market turmoil contributed to a flat month for new fundraising on London’s Alternative Investment Market (AIM) in September. However, new analysis indicates the market is holding its own in the face of wider economic uncertainty.

According to business advisory firm Deloitte, AIM’s strong performance in the second and third quarter of the year, particularly July and August, was tempered in September (traditionally one of AIM’s quietest months) with the lowest fundraising since 2005, at £230 million.

Notably, the third quarter saw more companies come to AIM with a market capitalisation of less than £10 million, compared to those companies worth greater than £10 million (49 versus 30). That reverses a trend over the last twelve months of fewer but larger companies coming to the market.

James Ferguson, Capital Markets partner at Deloitte, believes the impact of the global stock market turmoil affected all the stock exchanges for the month of September. However, he says that until now the AIM market has continued to demonstrate strong growth year on year as shown by the total amount of fundraising on AIM in Q3, which increased by 45% to £3.3bn compared to the same time last year.

Ferguson explains: “Underlying these strong fundraising statistics is a shift in the mix of fundraising with secondary fundraising representing £1.6bn or almost half of the total, compared to £0.5bn in Q3 2006, as institutions have shifted their focus somewhat, from new equity to investing further into existing successful AIM companies.”

Despite these changes, Ferguson says AIM continues to post impressive results. He believes that whilst the current market turmoil has undoubtedly delayed a number of transactions as well as causing some companies coming to market to scale back their fundraising ambitions, the results show that for high quality companies the markets remain open for both primary and secondary issues.

“Q4 is unlikely to see the record levels of fundraising seen in 2006, but will be an important pointer as to how we expect AIM to develop in 2008 as current market concerns continue to persist,” he said.






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