Highlights
- Secondary offerings on London's AIM remain strong
- £5.7 billion ($9.1 billion) raised in secondary offerings on London's AIM during 2010
- ‘Operating companies’ listed on the London Stock Exchange's AIM capture 85% of secondary offering funds raised on London's AIM during 2010
- Average size of London AIM-listed ‘operating company’ secondary offerings spiked by 80% during 2010
2008 -
£5.15m ($8.24m) 2009 - £4.56m ($7.30m) 2010 - £8.22m ($13.15m)
- Noticeable trend developing between London Stock Exchange AIM secondaries raising < £5m and the £5 - £30m range
<
£5m 2008 - 80% 2009 - 79% 2010 - 75%
£5 - £30m 2008 - 15% 2009 - 17% 2010 - 19%
- Relative number of London AIM-listed companies completing secondary offerings stabilizes
2008 - 36% 2009 - 54% 2010 - 56%
- London's AIM has expelled the vast majority of the weak and is supporting those that remain
The success of the secondary offering market on the London Stock Exchange's AIM is indisputable, which is the defining characteristic of a mature market. Since 2008, secondary offering funds raised on London's AIM have outpaced London AIM IPO funds raised by more than 5:1. The expectation is that this ratio will cut in half over the next few years, in line with the macroeconomic healing process, as investors’ risk profiles gradually shift back towards London Stock Exchange AIM IPOs. The early-stage growth profile and/or attractive valuations for companies listed on London's AIM that are ‘known quantities’ have been the main drivers of secondary offering activity on London's AIM.
When reviewing the “All Companies” tables below, one anomaly
should be adjusted for in order to arrive at a fair comparison. During 2009, there were three large London AIM Placing
& Open Offers which raised an aggregate of £1.1 billion for real estate
investment, development and management companies listed on the London Stock Exchange's AIM. Historically, the vast majority of secondary
offerings on London's AIM take the form of Placings and are much smaller in size. When the adjustments are made, the aggregate secondary
offering funds raised on the London Stock Exchange's AIM during 2009 drops from £4.9 billion to £3.8 billion and the
average drops from £6.38 million to £5.03 million.
All Companies |
London AIM
IPO Funds Raised
(in £ millions)
|
London AIM
Secondary Offering Funds Raised
(in £ millions)
|
2008
|
918
|
3,214
|
2009
|
610*
|
4,861**
|
2010
|
1,017
|
5,738
|
Total
|
2,545
|
13,813
|
* Includes two large London Stock Exchange AIM IPOs focused on acquiring
distressed real estate and commercial businesses. If excluded, London AIm IPO funds raised drops to £248m.
** Includes three large
London AIM Placing & Open Offers for real estate companies. If excluded, Secondary Offering funds raised
on London's AIM drops to £3,814m.
‘Operating Companies’* |
London AIM
IPO Funds Raised
(in £ millions)
|
London AIM
Secondary Offering Funds Raised
(in £ millions)
|
2008
|
523
|
2,539
|
2009
|
16
|
3,113
|
2010
|
723
|
4,888
|
Total
|
1,262
|
10,540
|
* Generally excludes SPACs, Investing Companies
and Investment and Real Estate Funds.
The key takeaways from the tables above are that secondary
offering activity on London's AIM has remained strong and 83% of the funds raised on London's over the last
three years have been for ‘operating companies’ listed on the London Stock Exchange's AIM, after adjusting for the
previously mentioned anomaly during 2009.
All Companies |
Number of
London AIM
Secondaries*
|
Gross Funds Raised
(in £ millions)
|
Average Funds Raised
(in £ millions)
|
2008
|
578
|
3,214
|
5.56
|
2009
|
762
|
4,861**
|
6.38**
|
2010
|
691
|
5,738
|
8.30
|
Total
|
2,031
|
13,813
|
6.80
|
* This
is the number of discrete secondary offering transactions. Some companies completed more than one
secondary offering per year.
** Includes three large Placing
& Open Offers for real estate companies.
If excluded, the gross and average drop to £3,814m and £5.03m.
‘Operating Companies’*
|
Number of
Secondaries**
|
Gross Funds Raised
(in £ millions)
|
Average Funds
Raised
(in £ millions)
|
2008
|
493
|
2,539
|
5.15
|
2009
|
682
|
3,113
|
4.56
|
2010
|
595
|
4,888
|
8.22
|
Total
|
1,770
|
10,540
|
5.95
|
* Generally excludes SPACs, Investing
Companies and Investment and Real Estate Funds.
** This is the number of
discrete secondary offering transactions.
Some companies completed more than one secondary offering per year.
The key takeaway from the tables above is that the average
size of secondary offerings on London's AIM spiked from 2009 to 2010; 65% for London's AIM as a
whole, after adjusting for the previously mentioned anomaly during 2009, and
80% for the ‘operating companies’ listed on the London Stock Exchange's AIM, from £4.56 million ($7.30 million) to £8.22
million ($13.15 million).
Consistent with the above (see chart below), there is
a slight, but noticeable, secondary offering trend on London's AIM developing with the
breakpoint being £5 million ($8 million).
The relative number of
secondary offerings on the London Stock Exchange's AIM raising less than this amount has decreased during 2008,
2009 and 2010 from 80%, 79% and 75%, respectively, whereas the relative number raising between £5
million ($8 million) and £30 million ($48 million) on London's AIM has increased during 2008,
2009 and 2010 from 15%, 17% and 19%, respectively.
This trend has developed on the London Stock Exchange's AIM because, during 2008 and 2009,
investors were willing to deploy relatively small amounts of capital to
continue to assess the viability of certain companies listed on London's AIM, whereas in 2010 capital
was being deployed on London's AIM for executing on organic and/or acquisitive growth
opportunities.
The relative number of companies that were able to complete
secondary offerings on London's AIM during 2010 stabilized at 56%. The chart below illustrates the ‘crash’ of
2008 and a wave of relatively small ‘rescue financings’ during 2009. The best evidence of the health and stability
of the secondary offering market on London's AIM is the fact that the average secondary
offering on London's AIM raised £8.30 million ($13.28 million) during 2010 with the average
secondary offering on the London Stock Exchange's AIM during 2005 - 2007 raising a very similar amount, £7.85
million ($12.56 million). As previously
mentioned, the breadth and depth of secondary offering activity on London's AIM is the defining
characteristic of a mature market.
The vast majority of weak companies were expelled from London's AIM
during 2008 - 2010 as investors selected those companies that would remain listed on the London Stock Exchange's AIM by providing
access to secondary offering funds on London's AIM.
