Oil price crash and Brexit woes fuel number of firms de-listing from AIM
The number of firms de-listing from the Alternative Investment Market (AIM) has jumped by a fifth in the last year as financial stress took hold.
Accountancy firm UHY Hacker Young found that 107 companies de-listed in the last year, up from 89 on the 12 months before. While insolvency and financial stress proved the most frequent cause of AIM de-listings for the year (accounting for the removal of 30 firms), Brexit jitters also made for a stormier fundraising environment.
Read more: Show me the money: Completing fundraising rounds in a post-Brexit world
The oil price crash has been another hefty obstacle for companies – a third of those that left did so because of financial trouble from the energy sector. UHY Hacker Young noted that low oil prices have undermined the profitability of those oil and gas firms already in production and again, made it much harder for earlier stage companies to raise funds needed to finance exploration.
There was also a 29 per cent drop in the number of firms listing on AIM, from 58 to 41 in the past year.
The number of companies de-listing is increasing (Source: UHY Hacker Young)
The number of AIM IPOs is dropping (Source: UHY Hacker Young)
Laurence Sacker, partner at UHY Hacker Young, said: “Depressed oil prices and this summer’s Brexit woes have taken their toll on AIM this year.”
He added: “AIM faces a double whammy – just when it needs new blood in the form of IPOs, the number of companies choosing to float on the junior market is dropping.”
Read more: What Brexit means for the UK's IPO market
It's not all doom and gloom though. Many investment banks do predict an uptick in the number of IPOs in the coming year.
“It’s entirely possible that this rising tide will lift AIM,” Sacker acknowledged. “There has been an increase in interest from overseas, with investors attracted to the weaker pound.”