- Number of listings on the London Stock Exchange's AIM and aggregate funds raised on London's AIM drop by 82% and 81%, respectively
- Average funds raised for ‘operating companies’ listed on London's AIM increases from £23m to £31m
- £780m raised from London Stock Exchange AIM IPOs for 26 U.S. companies listed on London's AIM across 16 industries since 2007
- U.S. ‘operating companies’ listing on London's AIM account for 17% of all operating company London AIM IPOs since 2007
- U.S. ‘operating companies’ listing on London's AIM account for 22% of funds raised on London's AIM since 2007
- IPO dilution on the London Stock Exchange's AIM increases slightly from 31% to 33%
- Secondary offerings on London's AIM hold firm for U.S. companies listed on London's AIM with an average of £7m
- £500m raised from secondary offerings on London's AIM for 36 U.S. companies listed on London's AIM since 2007
- 50% of all U.S. companies listed on London's AIM have completed at least one secondary offering on London's AIM since 2007
- Selling shareholder activity on London's AIM continues at historic levels
- U.S. accredited investor and Qualified Institutional Buyer participation on the London Stock Exchange's AIM moderates
London AIM IPOs
While London's AIM has certainly not been immune to the global
slowdown in IPOs, the codification of the London AIM Nominated Advisers (Nomads) Rules in
early 2007 has increased the scrutiny of prospective new entrants by Nominated Advisers (Nomads)
since the Nominated Adviser (Nomad) vouches to the London Stock Exchange (LSE) as to a company’s
suitability for listing on London's AIM. In
addition, the trend which began in 2006, and continued throughout 2007 on the London Stock Exchange's AIM, of a
significant number of Special Purpose Acquisition Corporations (SPACs) and
Investment and Real Estate Funds listing on London's AIM, has largely come to an
end. These factors cause the overall
London AIM metrics to be misleading; therefore, the following tables distinguish
between London AIM as a whole, which includes ‘investment vehicles’, and the ‘operating
companies’ listed on the London Stock Exchange's AIM on a stand-alone basis.
London's AIM had a higher proportion of ‘investment
vehicle’ IPOs in 2007 than in 2008 at 39% and 29%, respectively. While the number of listings on the London Stock Exchange's AIM decreased
substantially during 2008, the average funds raised for ‘operating companies’ listed on London's AIM increased
slightly to £19 million.
Entire Market
All Companies
|
Number of London AIM IPOs
|
Gross Funds Raised
(in £ billions)
|
Average Funds Raised
(in £ millions)
|
2007
|
182
|
6.26
|
34
|
2008
|
38
|
0.92
|
24
|
Exclusive of SPACs and Investment and Real Estate Funds:
Entire Market
‘Operating Companies’
|
Number of London AIM IPOs
|
Gross Funds Raised
(in £ billions)
|
Average Funds Raised
(in £ millions)
|
2007
|
111
|
1.99
|
18
|
2008
|
27
|
0.52
|
19
|
The U.S.
companies listed on the London Stock Exchange's AIM were relatively immune from the ‘investment vehicle’ phenomenon on London's AIM with
only three London AIM listings in 2007 and none in 2008. While
the limited number of U.S. company listings on London's AIM in each year makes it difficult to draw
firm conclusions, it is believed that an upward trend will persist from the £24
million average raised on London's AIM by the 50 U.S. ‘operating companies’ listed on London's AIM that completed IPOs
on London's AIM from 2005 – 2007. London Stock Exchange AIM investors continue
to seek larger, more mature companies.
U.S. Companies
All Companies
|
Number of London AIM IPOs
|
Gross Funds Raised
(in £ millions)
|
Average Funds Raised
(in £ millions)
|
2007
|
22
|
657
|
30
|
2008
|
4
|
123
|
31
|
U.S. Companies
‘Operating Companies’
|
Number of London AIM IPOs
|
Gross Funds Raised
(in £ millions)
|
Average Funds Raised
(in £ millions)
|
2007
|
19
|
431
|
23
|
2008
|
4
|
123
|
31
|
Since 2007, 26 U.S. companies listed on London's AIM and raised an
aggregate of £780 million via London AIM IPOs with 65% of these U.S. companies now listed on London's AIM raising between £5 million
and £50 million on London's AIM. It should be noted that
of the London Stock Exchange AIM IPOs that individually raised more than £50 million, almost half (3 of 7)
were for ‘investment vehicles’.
London AIM Dilution
As noted in the opening paragraph, London Stock Exchange AIM IPO conditions have
been challenging and, separately, Nominated Advisers (Nomads) have increased their scrutiny of
prospective AIM IPO listing candidates. The natural
consequence of these two factors is that the quality of the companies listing on London's AIM has increased and, as a result, the London AIM IPO dilution of existing
shareholders has decreased. Since the
decrease in dilution for the overall London AIM market has been significant and the
dilution for the U.S. companies listed on London's AIM has been relatively steady, it may be that the
U.S. companies listed on the London Stock Exchange's AIM have, on average, typically been of higher quality with more
compelling business propositions and stronger management teams, however, the
limited number of London AIM IPOs during 2008 makes it difficult to draw firm conclusions.
London AIM Industry
Dispersion
The 16 industries in which the 26 U.S.
companies listed on the London Stock Exchange's AIM operate are quite diverse; however, there is a concentration of oil and gas producers listed on London's AIM in Texas and concentrations
in technology, including; digital media, biotech and cleantech, between Boston and Washington D.C., in Florida and in California. In fact, the “Automobiles & Parts” company
listed on London's AIM in the chart below is a zero emissions vehicle manufacturer, the “Chemicals”
company listed on the London Stock Exchange's AIM is developing compounds for the health and growth of plants and
agricultural and the “Aerospace & Defense” company listed on London's AIM is a developer and
manufacturer of composite armor products for commercial and military uses.
London's AIM Secondary
Offerings
The secondary offering market for U.S. companies listed on the London Stock Exchange's AIM has been
healthy and remarkably consistent; however, there were some large transactions
that slightly skew the results. The first
is a £50 million NASDAQ listing during 2007 of a U.S. company that completed a £25 million
listing on London's AIM in 2003. This is considered a
secondary offering on London's AIM. The second is
a U.S.
company listed on the London Stock Exchange's AIM which raised £101 million in two secondary offerings on London's AIM during 2008. When these are excluded from the table below,
the average for 2007 and 2008 is £7.50 million and £6.40 million, respectively. 50% of all U.S. companies listed on London's AIM have completed at
least one secondary offering on London's AIM since 2007.
All U.S. Companies |
Number of
London AIM
Secondary Offerings
|
Gross Funds Raised
(in £ millions)
|
Average Funds Raised
(in £ millions)
|
2007
|
29
|
260
|
8.97
|
2008
|
27
|
236
|
8.74
|
London AIM Selling
Shareholder Activity
The ability of existing shareholders to sell some or all of
their holdings in a London Stock Exchange AIM IPO depends on a variety of factors; the most
important of which are the strength of the company and the level of investor
support. Historically, from 2005 – 2007,
22% of U.S. company IPOs on London's AIM included selling shareholders who were often
either founders of the company, longstanding members of executive management or
the board or directors, commercial partners who had made a strategic investment
in the company or VCs/PE Firms who invested in and nurtured the company for
several years prior to its London Stock Exchange AIM IPO. There
were three such transactions during 2007 and two during 2008 which is consistent
with historic levels. In one of the 2008
transactions, the Chairman and President, who had been with the company since
1969, sold 30% of his stake for £26 million.
While selling shareholders are most common in conjunction
with a London Stock Exchange AIM IPO, U.S.
company insiders have sold in the aftermarket on London's AIM in organized transactions on
three occasions since 2004; twice as part of secondary offerings on London's AIM and once on a
standalone basis. In all three
instances, the companies listed on London's AIM were performing exceptionally well with the organized
insider selling driven by a need to “satisfy excess demand” for the company’s
AIM-listed shares. One such transaction occurred
during 2007 in which executive management and certain non executive directors
and employees realized £9 million for themselves as part of a £17 million
secondary offering on the London Stock Exchange's AIM. There were no such
transactions during 2008.
U.S. London AIM Accredited Investor and Qualified
Institutional Buyer (QIB) Activity
U.S.
accredited investors and QIBs are permitted to participate in London Stock Exchange AIM IPOs and
secondary offerings on London's AIM. Historically, from
2005 – 2007, they have provided 20% of the funding for U.S. company listings on London's AIM
and 20% of the secondary offering funds raised on London's AIM for those companies. During 2007, four U.S.
companies listed on London's AIM raising an aggregate of £151 million with £89 million coming
from U.S.
accredited investors and QIBs. There
were no such transactions during 2008.
In terms of secondary offerings on London's AIM, 39% of the funds raised for U.S.
companies on the London Stock Exchange's AIM were provided by U.S. accredited investors and QIBs during 2007;
however, this is skewed by the £50 million NASDAQ listing discussed above and would
have otherwise been 25%. During 2008,
U.S. accredited investors and QIBs participated in 19% (5 of 27) of the secondary
offerings on London's AIM, contributing 40% of the total funds raised on London's, however, this too is
skewed by £76 million of the £101 million discussed above and would have
otherwise been only 11%.
