AIM higher: IPOs help junior index rally in 2020
Faced with a turbulent year, London’s AIM market ended the year higher after a rise in its healthcare and energy stocks and a slew of listings.
The junior exchange rallied 21 per cent in 2020, closing at 1,157.04 by the end of the year. The FTSE 100 by contrast ended down 14 per cent on the year, its biggest decline since 2008.
The AIM all-share index sunk to a low of 589.63 just before the UK’s first national lockdown last March but clawed back its losses by October, according to figures from Aim auditor BDO.
The junior exchange, with its stripped down regulatory and governance requirements, has long been seen as an attractive option for companies starting out.
There were just three IPOs on the index in the first half, mirroring the pause in floats as a result of the pandemic. But as markets started to reopen AIM saw a rebound in the second half with 13 IPOs, an increase on the 10 listings recorded in the whole of 2019.
“The increase in IPOs in the second half of the year points to a pent-up demand fo thigh quality growth companies that can create value in an economic environment that looks very different to a year ago,” said Scott Knight, head of audit at BDO.
The market was helped by the abundance of alternative energy firms of which a handful were amongst the 20 share price performers.
Among the top performers overall were unsurprisingly pharma groups Novacyt SA, which soared a staggering 6523 per cent and Synairgen, up 2504 per cent.
Healthcare, including pharma companies, also led the way in fundraising across the year. Figures show that money raised from further issues jumped 57 per cent to £5.3bn, with healthcare accounting for just over £1.2bn of the total.
“As we enter 2021, we are likely to see a shift away from balance sheet repair towards fundraising for growth capital, particularly in those sectors such as tech and pharma which will emerge stronger from the crisis,” Knight added.