London's AIM - Secondary Offering Activity - 2005 to 2007

Highlights

• Number of secondary offerings on the London Stock Exchange's AIM increases by 64%
• Average size of secondary offerings on London's AIM grows by 143% and now exceeds £10m
• 50% of London AIM-listed companies complete secondary offerings on London's AIM
• 50% of secondary offerings on the London Stock Exchange's AIM in all three years raise between £1m and £15m
• £9.7b raised in secondary offerings on London's AIM in 2007….55% more than raised in IPOs on London's AIM
• Outlook:  Secondary offering market on London's AIM is relatively cautious and selective with average retracing to £7m

The success of the secondary offering market on the London Stock Exchange's AIM is indisputable; however, that success should not be viewed in isolation, but rather through the lens of the broader market for London Stock Exchange AIM IPOs.  The emergence of Special Purpose Acquisition Corporations (SPACs) and Investment and Real Estate Funds in 2006 bifurcated the London AIM IPO market between ‘investment vehicles’ and ‘operating companies’ listed on the London Stock Exchange's AIM.  The effect on the London AIM IPO market was dramatic but the effect on the secondary offering market on London's AIM was more modest.

‘Operating companies’ listed on London's AIM captured 60% of the London AIM IPO funds raised in 2005 but only 30% in 2006 and 2007.  The comparable metrics for secondary offerings on the London Stock Exchange's AIM were 80% in 2005 and 70% in 2006 and 2007.

All Companies	London AIM IPO Funds Raised (in £ billions)	London AIM Secondary Offering Funds Raised (in £ billions)
2005	5.63	2.43
2006	9.32	5.73
2007	6.26	9.71

Exclusive of SPACs and Investment and Real Estate Funds:

‘Operating Companies’	London AIM IPO Funds Raised (in £ billions)	London AIM Secondary Offering Funds Raised (in £ billions)
2005	3.44	1.97
2006	2.77	3.85
2007	1.99	6.59

The number and average size of secondary offerings on London's AIM have grown dramatically.

All Companies	Number of London AIM Secondary Offerings	Gross Funds Raised (in £ billions)	Average Funds Raised (in £ millions)
2005	577	2.43	4.21
2006	751	5.73	7.63
2007	949	9.71	10.23

While the average size of secondary offerings on the London Stock Exchange's AIM has grown by 143%, it’s interesting to note that 50% of secondary offerings on London's AIM still raise between £1 million and £15 million.  The sub-£1 million offerings on London's AIM have decreased on a relative basis from 50% to 37% to 34% from 2005 to 2007 with a noticeable increase in secondary offerings on the London Stock Exchange's AIM in the £15 million to £30 million range during 2007.

 

While the number of companies listed on London's AIM has grown over the years, the number that have been able to complete secondary offerings on London's AIM has grown even quicker. 

 

The London AIM outlook for 2008 is for a relatively cautious secondary offering market on London's AIM.  Companies listed on London's AIM that are performing well and properly communicating with their London AIM investors, and the London Stock Exchange's AIM as a whole, will be able to complete secondary offerings on London's AIM, however, the average may decrease to £7m million.