The average and median AIM IPO during the first half of 2014 raised the equivalent of $75 million and $29 million, respectively, with 62% of the IPOs raising between $5 million and $85 million. 16 of the 42 IPOs included meaningful liquidity events for selling shareholders.
25 of the 42 companies generated significant revenues and the median trailing pre-money revenue multiple was 2.37. 15 of the 42 companies earned significant profits and the median pre-money P/E ratio and EBITDA multiple was 17.84 and 11.40, respectively.
Consumer services' businesses accounted for 31% of the AIM IPOs, although, it is interesting to note the significant technology component; half had as their main strategy the engagement of consumers online and/or via mobile. Industrials powered ahead, accounting for 17% of the IPOs, and pure technology companies accounted for 12%.
This post provides insight into each of the 42 companies; the industries and geographies in which they operate and their overall listing, financial and operating metrics.
Highlights
- 42 companies completed IPOs on AIM during H1 2014, a 91% increase over H1 2013
- 16 included meaningful equity and/or debt liquidity events for selling shareholders
- £1.9 billion ($3.2 billion) raised during H1 2014, a 620% increase over H1 2013
- More capital raised during H1 2014 than in 2012 and 2013 combined
- Average IPO raised £44.2 million ($75.1 million), median £17.3 million ($29.4 million)
- At a cost of 6.2% and 9.6%, respectively, of gross funds raised
- 62% of IPOs raised between £3 million and £50 million ($5 million and $85 million)
- Average opening MC of £99 million ($168 million), median £45 million ($77 million)
- 71% of MCs between £10 million and £250 million ($17 million and $425 million)
- IPO dilution of existing shareholders amounted to 34%
- Average post-IPO free float of 50%
- Average and median share price return of 8% and 5% since IPO (median date 4/9/14)
- FTSE AIM All-Share Index fell 8% during H1 2014 and 7% from 4/9/14 - 6/30/14
- 25 of the 42 companies generated revenues > £2 million (range £2 million - £297 million)
- Median trailing pre-money revenue multiple of 2.37
- Those w/o significant revenues broadly in oil and gas, technology or healthcare
- 15 of the 42 companies earned profits > £1 million (range £1 million - £17 million)
- Median trailing pre-money P/E ratio and EBITDA multiple of 17.84 and 11.40
- Industry and geographic dispersion and financial profile of the 42 companies - pages 5 - 7
- Detailed descriptions and insights into the 42
companies - pages 8 - 10
Number of IPOs
|
Gross Funds Raised
(in £ millions)
|
Average Funds
Raised
(in £ millions)
|
|
H1 2012
|
22
|
200
|
9
|
H2 2012
|
23
|
495
|
22
|
H1 2013
|
22
|
258
|
12
|
H2 2013
|
40
|
767
|
19
|
H1 2014
|
42
|
1,858
|
44
|
Total
|
149
|
3,578
|
24
|
The table above shows that the surge of IPO activity on AIM
during the second half of 2013 carried into the first half of 2014 and, in
fact, more capital was raised during the first half of 2014 than in 2012 and
2013 combined.
From a sectoral perspective, consumer services’ businesses
accounted for 31% of AIM IPOs during the first half of 2014, although, it is
interesting to note the significant technology component; half had as their
main strategy the engagement of consumers online and/or via mobile. Industrials powered ahead, accounting for 17%
of the IPOs, and pure technology company IPOs on AIM accounted for 12%. Financial companies abated to 9% of the IPOs
and the natural resource sectors (i.e. oil and gas and mining) remained in the
doldrums, accounting for 12% of the IPOs during the first half of 2014 whereas
they accounted for 21% and 33% of the IPOs in 2013 and 2012, respectively.
The chart below provides the distribution of gross funds
raised from AIM IPOs during the first half of 2014. While private equity and other long-term
shareholders engineered some unusually large transactions in the context of AIM,
the sweet spot for AIM IPOs remains between £3 million and £50 million ($5
million and $85 million).
Of the aggregate gross funds raised, 82% was for the companies and 18% was for selling shareholders, which were present in 15 of the IPOs, with 12 selling a meaningful equity stake and/or receiving repayment of shareholder debt and an additional four solely receiving repayment of shareholder debt. While the average amount of gross capital raised was £44.2 million ($75.1 million), the median was only £17.3 million ($29.4 million).
The equation in the chart at the top of the next page can be
used to predict the cost of an AIM IPO with 91% confidence. The 34 data points represent the gross funds
raised and associated costs for the non-Investing Company IPOs that raised at
least £3 million ($5 million). Since
these 34 companies raised an average of £54.2 million ($92.1 million), the
expected cost would be £3.1 million ($5.3 million) or 5.7% of the gross funds
raised.
The average and median offering costs for all 42 AIM IPOs amounted to 13% and 10%, respectively, of the gross funds raised, however, the average, in particular, is skewed by a number of relatively small IPOs where the fixed costs dominate.
The chart below provides the distribution of opening market
capitalizations. The average company’s
opening market capitalization was £99 million ($168 million) whereas the median
was £45 million ($77 million). The sweet
spot for market capitalizations on AIM is between £10 million and £250 million
($17 million and $425 million).
The aggregate opening market capitalization of the 42 companies that completed IPOs on AIM during the first half of 2014 was £4.2 billion ($7.1 billion). The average and median post-IPO free float of these companies was 50% and 46%, respectively.
The first chart on the next page tells a number of stories with
respect to the IPO dilution of existing shareholders. Toward the end of the last bull market for
AIM IPOs in 2007, the quality of the companies decreased, which led to an
increase in dilution. In response, the LondonStock Exchange codified the AIM Rules for Nominated Advisers, which increased
the scrutiny of prospective new entrants by Nomads. This led to higher quality companies
completing IPOs and a decrease in dilution (2009 is an anomaly given the lack
of IPOs), which was exacerbated by the global financial crisis and investor
aversion to risk. The second half of
2013 represented the start of a new bull market for AIM IPOs, however, now the
quality of the companies is outstanding and the increase in dilution is a
result of company and investor demand for larger capital raises.
The final chart in this section provides the distribution of share price returns since each of the 42 companies completed their IPOs through June 30, 2014. It should be noted that the median IPO date is April 9, 2014, therefore, the average and median returns of +8% and +5%, respectively, only represent, on average, the last 83 days of the first half of 2014. As a point-of-reference, the FTSE AIM All-Share Index fell 8% during the first half of 2014 and 7% from April 9, 2014 through June 30, 2014; therefore, the relative performance of the 42 IPOs has been quite strong.
Industry and Geographic Dispersion and Revenue and Profitability Profile
Revenue and Profitability*
|
U.K. (27)
|
Australasia (3)
|
Israel (3)
|
China (2)
|
Other (7)
|
Totals (42)
|
Consumer Services (13)
|
5 SR & SP
1 SR
1 Neither
|
1 SR & SP
|
2 SR & SP
|
1 SR & SP
1 SR
1 Neither
|
9 SR & SP
2 SR
2 Neither
|
|
Industrials (7)
|
1 SR & SP
3 SR
1 Neither
|
1 SR
1 Neither
|
1 SR & SP
4 SR
2 Neither
|
|||
Technology (5)
|
1 SR & SP
3 Neither
|
1 Neither
|
1 SR & SP
4 Neither
|
|||
Financials (4)
|
2 SR & SP
1 Neither
|
1 SR
|
2 SR &SP
1 SR
1 Neither
|
|||
Healthcare (3)
|
1 SR
1 Neither
|
1 Neither
|
1 SR
2 Neither
|
|||
Consumer Goods (3)
|
1 Neither
|
1 SR
|
1 SR
|
2 SR
1 Neither
|
||
Oil & Gas / Cleantech
(3)
|
2 Neither
|
1 Neither
|
3 Neither
|
|||
Basic Materials (2)
|
1 Neither
|
1 SR & SP
|
1 SR & SP
1 Neither
|
|||
Telecoms (2)
|
1 SR & SP
1 Neither
|
1 SR & SP
1 Neither
|
||||
Totals
(42)
|
10 SR & SP
5 SR
12 Neither
|
1 SR & SP
2 Neither
|
2 SR & SP
1 SR
|
1 SR & SP
1 Neither
|
1 SR & SP
4 SR
2 Neither
|
15 SR & SP
10 SR
17 Neither
|
* Significant
Revenues (SR) and Significant Profitability (SP) are defined as > £2
million and > £1 million, respectively.
|
||||||
AIM-listed companies are organized into 90 sub sectors,
which feed into 40 sectors, which feed into 10 super sectors. The first pie chart on the previous page
illustrates the nine super sectors in which AIM IPOs occurred during the first
half of 2014. The only super sector that
was not represented with an IPO during the first half of 2014 was
Utilities. Since the classifications can
be deceptive, the table at the end of this newsletter on pages 8 - 10 provides
some detailed descriptions and insights into the individual companies.
The second pie chart on the previous page shows the main
country of operation for the companies that completed IPOs on AIM. Consumer services’ businesses accounted for
31% of the IPOs during the first half of 2014, although, it is interesting to
note the significant technology component; half had as their main strategy the
engagement of consumers online and/or via mobile. Industrials powered ahead, accounting for 17%
of the IPOs, and pure technology companies accounted for 12%. Financial companies abated to 9% of the IPOs
and the natural resource sectors (i.e. oil and gas and basic materials/mining)
remained in the doldrums, accounting for 12% of the IPOs during the first half
of 2014 whereas they accounted for 21% and 33% of the IPOs in 2013 and 2012,
respectively.
Unsurprisingly, the U.K. is the main place of operation for
more AIM-listed companies than any other country. Approximately 58% of the 1,100 companies
listed on AIM are based in the U.K.
Given the fact that the global financial crisis affected the U.K. more
deeply and for longer than many other countries, the trend away from U.K.
company IPOs on AIM has reversed in response to satisfying pent-up U.K. demand. While only 31% of AIM IPOs were for U.K.
companies in 2012, this figure grew to 53% in 2013 and 65% during the first
half of 2014.
Of the 42 companies that completed AIM IPOs during the first
half of 2014, 25 (60%) generated significant revenues (i.e. > £2 million or
$3 million) during their most recent financial year with the range being £2
million - £297 million ($3 million - $505 million). The average pre-money revenue multiple was
2.68 and the median was 2.37. Of the 25
companies that generated significant revenues, 15 (60%) earned significant
profits (i.e. > £1 million or $2 million), with the range being £1 million -
£17 million ($2 million - $29 million).
The average pre-money P/E ratio and EBITDA multiple for the 15 companies
that earned significant profits was 25.49 and 17.23, respectively, and the
medians were 17.84 and 11.40.
Of the 27 U.K. companies that completed AIM IPOs during the
first half of 2014, 15 (56%) generated significant revenues during their most
recent financial year. Of these 15 companies,
10 (67%) earned significant profits. The
comparative metrics for 2013 were 67% and 36%, respectively, indicating that,
on the one hand, investors during the first half of 2014 were willing to back
more early-stage U.K. companies but, on the other, were demanding that more of
those that generated significant revenues had also earned significant
profits. Of the 15 companies from
outside the U.K. that completed AIM IPOs during the first half of 2014, 10
(67%) generated significant revenues. Of
these 10 companies, five (50%) earned significant profits. The comparative metrics for 2013 were 48% and
57%, respectively, indicating that investors wanted to see more commercial
traction but are willing to wait a little longer for significant profits.
Only one of the 42 companies that completed its AIM IPO
during the first half of 2014 did so via the ‘fast track route to AIM’, where
their securities were traded on an AIM Designated Market (ADM) for at least the
previous 18 months. In this case, the
UKLA Official List (i.e. the London Stock Exchange’s Main Market) was the
ADM. During 2013, two of the 62 AIM IPOs
utilized the fast track route, both with the UKLA Official List as the ADM, and
during 2012, two of the 45 AIM IPOs utilized the fast track route, both with
the Australian Securities Exchange (ASX) as the ADM. Companies utilizing the fast track route do
not have to produce the typical AIM Admission Document but rather a brief, but
detailed, pre-admission announcement.
The 10 ADMs are the top tier markets of the ASX, Deutsche Börse Group,
Johannesburg Stock Exchange, NASDAQ, NYSE, NYSE Euronext, NASDAQ OMX Stockholm,
Swiss Exchange, TMX Group and UKLA Official List.
The migration of companies to AIM from the ICAP Securities
& Derivatives Exchange (ISDX, formerly the PLUS Stock Exchange and formerly
OFEX) in the U.K. continues with three of the 42 companies that completed IPOs
on AIM during the first half of 2014 having been previously listed on
ISDX. During 2013 and 2012, six of the
62 companies and two of the 45 companies, respectively, that completed IPOs on
AIM were previously listed on ISDX.
One final point to note during the first half of 2014 is
that one company simultaneously listed on AIM and the Enterprise Securities
Market of the Irish Stock Exchange.
Consumer
Services
(13)
|
One intends to become the leading fashion ecommerce
website in India, one is the U.K.’s largest pure-play online own brand
fashion retailer, one is the largest hotel operator in Ireland, one is a
global digital publisher and marketing company that attracts paying users
from different online channels and directs them to online gambling operators,
one is a dealer in rare and antiquarian books and other works on paper to
public institutions and collectors around the world, one is the owner and
operator of ‘boutique hostels’ which provide a level of accommodation between
traditional hostels and budget hotels, one is a U.K. branded café and casual
dining group offering cakes, pastries, snacks, meals and hot and cold drinks,
one is a U.K. specialist value footwear retailer, one is a provider of
proprietary technology solutions for optimizing online advertising revenue
for publishers (i.e. website owners) globally, one is a U.K. consumer
marketing business focused on the U.K. personal injury market, one is an online
retailer with established flash sales sites in Australia, New Zealand and
Southeast Asia that provide a complete B2B solution for brands to dispose of
excess inventory, one is a provider of specialized mobile marketing services
to mobile network operators in emerging markets, principally the Middle East,
and one is an international owner, developer, operator and franchisor of
‘super budget’ branded hotels
|
Industrials
(7)
|
One is a vertically-integrated innovator in pallet
development, manufacture, supply and management, one is an independent mail,
parcels and logistics end-to-end network operator in the U.K. and Ireland,
one is a spin-out from the University of Leeds that developed a patented
reusable and recyclable polymer bead cleaning systems for intended use in the
laundry, leather processing, garment finishing and metal cleaning industries,
one is an international provider of payment services, risk management and IT
solutions for businesses that wish to accept or make online payments, one is
a vertically-integrated international energy consultant, engineer and power
generator (wind, solar and diesel), one is a home safety products’ supplier of
smoke and carbon monoxide alarms and related accessories and one is a specialist
supplier of technical fluid power products (hydraulic and industrial hosing
and valves and pumps)
|
Technology
(5)
|
One has developed a proprietary search engine that uses a
client’s search parameters to identify relevant cutting-edge technology and
intellectual property developed by leading universities and research
institutions for possible acquisition where the company can also provide the
client with access to their science advisory board and/or broker the
acquisition, one provides a digital transaction platform to the retail and
hospitality industries for the secure multi-channel issuance, management and
redemption of promotional offers, gift vouchers and loyalty-based rewards,
one is a cloud-based Big Data analytics platform that combines four key
technologies; data extraction, cleansing, enrichment and visualization, one
provides amusement park operators in China and Malaysia with the ability to
manage and analyze tickets, visitors, merchandise sales and other amusement
park operations and one provides software and services to mobile operators
and enterprises that integrate into the ‘last mile’ of delivery over mobile
networks, internet infrastructure or social media platforms, allowing
enterprises to use mobile as a channel to create new revenue streams, as a
CRM and customer engagement channel and to improve business efficiency
|
Financials
(4)
|
One is an established German commercial real estate
company, one is an investing company that intends to create a portfolio of
companies whose growth and success is linked to the world's changing
demographics with investments focused on health and wellness (aging
population), resources (energy, food, water and housing), the rise of the
middle class (particularly in Asia) and ecommerce, one is a specialist long-term
income U.K. REIT with a portfolio that includes some of the U.K.’s top
visitor attractions and theme parks and 21 private hospitals and one is an independent
financial advisory and discretionary wealth management firm
|
|
(3)
|
One is a newly formed pharmaceutical company which intends
to develop pharmaceutical assets by utilizing management’s understanding of,
and access to solutions for, the technical, regulatory, clinical and
financial challenges that are required to bring novel therapeutics to market,
one supplies research tools, built around their proprietary translational
genomics platform, which consists of a high-precision and flexible suite of
gene editing tools, to organizations engaged in genomics research and the
development of personalized medicines for modeling the disease-causing
mutations found in genetically based diseases, allowing customers to identify
the effect of individual or compound genetic mutations on drug activity,
patient responsiveness, and resistance, which may lead to the successful
prediction of which patient sub-groups will respond to currently-available
and future drug treatments and one is a developer and manufacturer of hands-free
robotic exoskeletons made of mechanical legs linked by a strong hip girdle
for use by people with mobility impairments, allowing them to stand and walk
autonomously without the need for crutches or supports
|
Consumer
Goods
(3)
|
One is a supplier of buttons, buckles, trimmings and
accessories to the clothing and related industries, one is a consumer
healthcare company that develops products for the aging population in the
areas of food supplements to help lower LDL cholesterol and improve brain
function and memory, dermo-cosmetics and cosmetics for skin ageing and hair
loss and medical devices for improving conditions such as minor aches and
pains, dry eyes and itchy skin and one is a designer, creator and provider of
innovative formalwear tailoring for globally renowned department stores and
premium private label brands
|
Oil & Gas /
Cleantech
(3)
|
One intends to discover, appraise and develop oil and gas resources
in naturally fractured basement reservoirs across the U.K. Continental Shelf,
one is a vertically-integrated turbine supplier and project owner in the Scottish
tidal energy power industry and one is an oil exploration and development
company focused on overlooked and emerging resource in New Zealand and
Australia
|
Basic
Materials
(2)
|
One has developed a proprietary scalable plasma process, embodied
in its manufacturing machines and the processes performed in them, to
functionalize graphenes and other nanomaterials which it intends to
commercialize with raw material producers and industrial corporations for use
in battery and energy storage, electronic devices, including bio-medical
sensors, conductive inks and films and polymer composite fillers and resins
since graphene, as a single carbon lattice layer, has outstanding thermal,
mechanical and electrical properties and one is a Hong Kong-based trader in
non-ferrous metals, principally aluminum and copper, that it imports from a
variety of international sources and resells into Mainland China for processing
into a 'clean' form for sale to foundries
|
Telecoms
(2)
|
One owns, builds and operates fiber optic infrastructure and
is the largest independent provider of fiber infrastructure to mid-sized
cities and major towns in the U.K., providing gigabit capable infrastructure
for enterprise and public sector organizations, service providers, mobile
network operators and businesses and one is the leading communication
solutions’ provider on the Isle of Man, offering a wide range of fixed line,
broadband, mobile, and datacenter services to businesses, consumers and the
public sector
|
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