Further evidence of the continuing bull market for AIM IPOs can be found in the aggressive shift in the ratio of secondary offering funds raised to IPO funds raised; reducing from 3.57:1 in 2012 to 2.65:1 in 2013 and to near parity at 1.16:1 in 2014.
The distribution of gross funds raised from secondary offerings during 2014 continued to 'barbell'. Coming out of the global financial crisis, AIM largely consists of two classes of growth-oriented SMEs; those that are very close to self-sustainability and only require small cash injections and those that have achieved significant scale and are aggressively acquiring competitive and complementary businesses for substantial sums.
Gross funds raised from secondary offerings during 2014 rose by 20% and, consistent with the above with respect to many AIM-listed companies now seeking larger amounts of capital so as to execute upon acquisition campaigns, the average size of secondary offerings during 2014 rose by 18%.
Sustainable economic growth has gathered pace in the UK and the U.S. in particular. While 59% of the 1,104 companies currently listed on AIM are based in the UK, only 52% of the IPOs since 2012 were for UK companies. There has been a relative surge of IPOs from China, Africa and the U.S., accounting for 11%, 5% and 5%, respectively, since 2012.
The internationalization of AIM is expected to continue, however, the focus should shift towards the U.S. since China lifted its moratorium on domestic IPOs in January 2014 that had been in place since October 2012 and the vast majority of African IPOs were natural resource focused, which is currently out-of-favor.
Highlights
- £3.3 billion ($5.1 billion) raised in secondary offerings during 2014
- Secondary offerings on AIM raise 20% more capital during 2014 than 2013
- Sustainable growth has gathered pace in the UK and the U.S. in particular
- Companies are maturing, as is AIM in its 19th year, and require acquisition capital
- The second half of 2013 represented the start of a new bull market for AIM IPOs
- More AIM IPO capital raised during 2014 than in 2011, 2012 and 2013 combined
- Ratio of secondary offering funds raised to IPO funds raised decreases sharply
2012 - 3.57:1
2013 - 2.65:1 2014 - 1.16:1
- The internationalization of AIM is expected to continue but focus should shift to the U.S.
- Pent-up demand still to be satisfied in the UK, global financial crisis was deeper/longer
- Since 2012, UK captures 52% of IPOs, China 11%, Africa 5% and the U.S. 5%
- China lifted its moratorium on domestic IPOs in January 2014
- African IPOs were natural resource focused, which is now out-of-favor
- Average size of secondary offerings rose by 18% during 2014
2012 - £4.66m ($7.22m) 2013 - £4.58m ($7.10m) 2014 - £5.39m ($8.35m)
- Distribution of secondary offerings continued to ‘barbell’ during 2014
- < £3m and > £10m raises were 80% of activity, now 85%
- £3m - £10m raises were 20% of activity, now 15%
- Step-change up in the relative number of AIM-listed companies completing secondaries
2012 - 48% 2013 - 54% 2014 - 55%
IPO Funds Raised
(in £ millions)
|
Secondary Offering
Funds Raised
(in £ millions)
|
|
2012
|
695
|
2,478
|
2013
|
1,025
|
2,716
|
2014
|
2,818
|
3,269
|
Total
|
4,538
|
8,463
|
Since the London Stock Exchange launched AIM in 1995, an
aggregate of £90 billion ($140 billion) has been raised for growth-oriented
SMEs, £40 billion ($62 billion) for IPOs and £50 billion ($78 billion) for
Secondary Offerings.
The second half of 2013 represented the start of a new bull
market for AIM IPOs that carried over into 2014. In fact, more capital was raised on AIM for
IPOs during the 2014 than in 2011, 2012 and 2013 combined. Further evidence of the start of a new bull
market for AIM IPOs can be found in the aggressive shift in the ratio of
secondary offering funds raised to IPO funds raised; reducing from 3.57:1 in
2012 to 2.65:1 in 2013 and to near parity at 1.16:1 in 2014.
Sustainable economic growth has gathered pace in the UK and
the U.S. in particular. While 59% of the
1,104 companies currently listed on AIM are based in the UK, only 52% of the
IPOs since 2012 were for UK companies.
There has been a relative surge of IPOs from China, Africa and the U.S.,
accounting for 11%, 5% and 5%, respectively, since 2012. The internationalization of AIM is expected
to continue, however, the focus should shift towards the U.S. since China
lifted its moratorium on domestic IPOs in January 2014 that had been in place
since October 2012 and the vast majority of African IPOs were natural resource
focused, which is currently out-of-favor.
The table below shows that the distribution of gross funds
raised from secondary offerings continued to ‘barbell’ during
2014. Coming out of the global financial
crisis, AIM largely consists of two classes of growth-oriented SMEs; those that
are very close to self-sustainability and only require small cash injections
and those that have achieved significant scale and are aggressively acquiring
competitive and complementary businesses for substantial sums.
(in £ millions)
|
2012
|
2013
|
2014
|
< 3
|
70%
|
71%
|
74%
|
3 - 10
|
20%
|
17%
|
15%
|
10 - 50
|
9%
|
11%
|
8%
|
> 50
|
1%
|
1%
|
3%
|
The table at the top of the next page shows that gross funds raised from secondary offerings rose by 20% during 2014 and, consistent with the above with respect to many AIM-listed companies now seeking larger amounts of capital so as to execute upon acquisition campaigns, the average size of secondary offerings rose by 18% during 2014.
Number of
Secondaries*
|
Gross Funds Raised
(in £ millions)
|
Average Funds
Raised
(in £ millions)
|
|
2012
|
532
|
2,478
|
4.66
|
2013
|
593
|
2,716
|
4.58
|
2014
|
607
|
3,269
|
5.39
|
Total
|
1,732
|
8,463
|
4.89
|
* This is the number of discrete secondary
offering transactions. Some companies
completed more than one secondary offering per year.
The chart below shows that there has been a step-change up
in the relative number of AIM-listed companies completing secondary offerings,
which coincides with the start of the new bull market for AIM IPOs. The robustness of the secondary offering
market on AIM is indisputable, which is the litmus test of success for a stock
exchange focused on growth-oriented SMEs.
