The average and median AIM IPO during the first half of 2015 raised $32 million and $17 million, respectively, with 65% raising between $5 million and $47 million. 7 of the 23 IPOs included meaningful liquidity events for selling shareholders. The average and median opening market caps were $101 million and $70 million, respectively, with 87% falling between $16 million and $388 million.
16 of the 23 companies generated
significant revenues and the median trailing pre-money revenue multiple was
1.54. 10 of the 23 companies earned significant profits and the median
trailing pre-money P/E ratio and EBITDA multiple was 14.85 and 10.26,
respectively.
Consumer services' businesses accounted for 22% of the AIM IPOs during the first half of 2015, although, it is interesting to note the technology component; two of the five engage with consumers exclusively online. Industrial companies also accounted for 22%, financials for 17% (three of the four were Investing Companies with TMT mandates), healthcare AIM IPOs and consumer goods each accounted for 13% (two of the three healthcare companies were from the U.S. and all three were in the biotech/pharma sector with no revenue; two of the three consumer goods' companies were focused exclusively or primarily online), pure play technology accounted for 9% and basic materials (i.e. mining) for 4%.
This post provides insight into each of the 23 companies; the industries and geographies in which they operate and their overall listing, financial and operating metrics.
Consumer services' businesses accounted for 22% of the AIM IPOs during the first half of 2015, although, it is interesting to note the technology component; two of the five engage with consumers exclusively online. Industrial companies also accounted for 22%, financials for 17% (three of the four were Investing Companies with TMT mandates), healthcare AIM IPOs and consumer goods each accounted for 13% (two of the three healthcare companies were from the U.S. and all three were in the biotech/pharma sector with no revenue; two of the three consumer goods' companies were focused exclusively or primarily online), pure play technology accounted for 9% and basic materials (i.e. mining) for 4%.
This post provides insight into each of the 23 companies; the industries and geographies in which they operate and their overall listing, financial and operating metrics.
Highlights
- 23 companies completed IPOs on AIM during H1 2015, a 45% decrease from H1 2014
- 7 included meaningful liquidity events for selling shareholders
- £468 million ($725 million) raised for IPOs during H1 2015, a 75% decrease from 2014
- £2.4 billion ($3.7 billion) raised in secondary offerings during H1 2015, a 20% increase
- Average IPO raised £20.4 million ($31.6 million), median £11.2 million ($17.4 million)
- At a cost of 9.0% and 11.3%, respectively, of gross funds raised
- 65% of IPOs raised between £3 million and £30 million ($5 million and $47 million)
- Average opening MC of £65 million ($101 million), median £45 million ($70 million)
- 87% of MCs between £10 million and £250 million ($16 million and $388 million)
- IPO dilution of existing shareholders amounted to 26%
- Average post-IPO free float of 33%
- Average and median share price return of 112% and 10% since IPO (median date 4/2/15)
- FTSE AIM All-Share Index rose 8% during H1 2015 and 2% from 4/2 - 6/30/15
- 16 of the 23 companies generated revenues > £2 million (range £3 million - £1.1 billion)
- Median trailing pre-money revenue multiple of 1.54
- Those w/o significant revenues are investing companies or in healthcare or mining
- 10 of the 23 companies earned profits > £1 million (range £2 million - £13 million)
- Median trailing pre-money P/E ratio and EBITDA multiple of 14.85 and 10.26
- Industry and geographic dispersion and financial profile of the 23 companies - pages 5 - 7
- Detailed descriptions and insights into the 23 companies - pages 8 and 9
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
|
H2 2014
|
40
|
960
|
24
|
H1 2015
|
23
|
468
|
20
|
Total
|
212
|
5,006
|
24
|
The table above shows that there was a pause in the 18-month
bull market for AIM IPOs during the first half of 2015 as a result of the UK
General Election and a resumption of the Greek debt crisis. Since the result of the UK General Election
was definitive (i.e. no coalition government) and positive for business and
Greece has taken a more reasonable and realistic positon with the EU, the
expectation is that AIM IPOs will be back up around 40 during the second half
of 2015.
From a sectoral perspective, consumer services’ businesses
accounted for 22% of AIM IPOs, although, it is interesting to note the technology
component; two of the five engage with consumers exclusively online. Industrial companies also accounted for 22%, financials
for 17% (three of the four were Investing Companies with TMT mandates),
healthcare and consumer goods each accounted for 13% (two of the three healthcare
companies were from the U.S. and all three were in the biotech/pharma sector
with no revenue; two of the three consumer goods’ companies were focused online),
pure play technology accounted for 9% and basic materials (i.e. mining) for 4%. The oil and gas sector is currently closed to
investment, with no IPOs during the first half of 2015 after accounting for 11%,
21% and 33% during 2014, 2013 and 2012.
The chart below provides the distribution of gross funds
raised from AIM IPOs during the first half of 2015. While there was a spike in IPOs raising between
£15 million and £30 million ($23 million and $47 million), this half-year did
not have enough activity to convey the fact that the sweet spot for AIM IPOs is
between £3 million and £50 million ($5 million and $78 million).
Of the aggregate gross funds raised, 80% was for the
companies and 20% was for selling shareholders, which were present in nine of
the IPOs, with seven selling a meaningful equity stake. While the average amount of gross capital
raised was £20.4 million ($31.6 million), the median was only £11.2 million ($17.4
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 17 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
17 companies raised an average of £24.8 million ($38.4 million), the expected
cost would be £2.1 million ($3.3 million) or 8.5% of the gross funds raised.
The average and median offering costs for all 23 AIM IPOs amounted
to 14% and 10%, respectively, of the gross funds raised, however, the average,
in particular, is skewed by a handful 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 £65 million ($101 million) whereas the median
was £45 million ($70 million). The sweet
spot for market capitalizations on AIM is between £10 million and £250 million
($16 million and $388 million).
The aggregate opening market capitalization of the 23
companies that completed IPOs on AIM during the first half of 2015 was £1.5 billion
($2.3 billion). The average and median post-IPO
free float of these companies was 33% and 28%, respectively.
The first chart on the next page shows that during the
depths of the global financial crisis in Europe, when investor aversion to risk
was at its height, the IPO dilution of existing shareholders decreased markedly
since only the highest quality companies were able to complete AIM IPOs. The second half of 2013 represented the start
of a new bull market for AIM IPOs and the quality of the companies remained
high. The increase in dilution during
2014 was simply the result of company and investor demand for larger capital
raises.
The UK General Election and a resumption of the Greek debt
crisis during the first half of 2015 created a pause in the bull market for AIM
IPOs, which meant that only the highest quality companies were able to complete
AIM IPOs, resulting in a slight decrease in dilution. Since the result of the UK General Election
was definitive and Greece has taken a more reasonable positon with the EU, the
expectation is that the bull market for AIM IPOs will resume during the second
half of 2015 and IPO dilution of existing shareholders will continue its upward
trend.
The final chart in this section provides the distribution of
share price returns. It should be noted
that there was one AIM IPO that surged nearly 2,100%. If that IPO is excluded, the average and
median returns would be 21% and 9%, respectively. As a point-of-reference, the FTSE AIM All-Share
Index rose 8% during the first half of 2015 and 2% from April 2, 2015 through June
30, 2015; therefore, the relative performance of the 23 IPOs has been quite
strong.
Industry and
Geographic Dispersion and Revenue and Profitability Profile
Revenue and
Profitability*
|
UK (13)
|
China (3)
|
U.S. (2)
|
Israel (2)
|
Other (3)
|
Totals (23)
|
Consumer Services (5)
|
2 SR & SP
|
1 SR & SP
|
2 SR & SP
|
5 SR & SP
|
||
Industrials (5)
|
2 SR & SP
2 SR
|
1 SR & SP
|
3 SR & SP
2 SR
|
|||
Financials (4)
|
1 SR & SP
2 Neither
|
1 Neither
|
1 SR & SP
3 Neither
|
|||
Healthcare (3)
|
1 Neither
|
2 Neither
|
3 Neither
|
|||
Consumer Goods (3)
|
2 SR
|
1 SR & SP
|
1 SR & SP
2 SR
|
|||
Technology (2)
|
1 SR
|
1 SR
|
2 SR
|
|||
Basic Materials (1)
|
1 Neither
|
1 Neither
|
||||
Totals
(23)
|
5 SR & SP
5 SR
3 Neither
|
2 SR & SP
1 Neither
|
2 Neither
|
1 SR & SP
1 SR
|
2 SR & SP
1 Neither
|
10 SR & SP
6 SR
7 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 relative number of AIM IPOs in each super sector during the
first half of 2015. Since the
classifications can be deceptive, the table at the end of this newsletter on
pages eight and nine provides some detailed descriptions and insights into the
individual companies.
From a sectoral perspective, consumer services’ businesses
accounted for 22% of AIM IPOs, although, it is interesting to note the
technology component; two of the five engage with consumers exclusively
online. Industrial companies also
accounted for 22%, financials for 17% (three of the four were Investing
Companies with TMT mandates), healthcare and consumer goods each accounted for
13% (two of the three healthcare companies were from the U.S. and all three
were in the biotech/pharma sector with no revenue; two of the three consumer
goods’ companies were focused online), pure play technology accounted for 9%
and basic materials (i.e. mining) for 4%.
The oil and gas sector is currently closed to investment, with no IPOs
during the first half of 2015 after accounting for 11%, 21% and 33% during
2014, 2013 and 2012.
The second pie chart on the previous page shows the main
country of operation for the companies that completed IPOs on AIM during the
first half of 2015. Unsurprisingly, the
UK is the main place of operation for more AIM-listed companies than any other country. Approximately 60% of the 1,068 companies listed
on AIM are based in the UK. During the
depths of the global financial crisis in Europe, UK companies only accounted
for 31% of AIM IPOs in 2010, 2011 and 2012.
The second half of 2013 represented the start of a new bull market for
AIM IPOs and UK company participation bounced back to expected levels,
accounting for 53%, 63% and 57% of AIM IPOs during 2013, 2014 and the first
half of 2015, respectively.
Of the 23 companies that completed AIM IPOs during the first half of 2015, 16 (70%) generated significant revenues (i.e. > £2 million or $3 million) during their most recent financial year with the range being £3 million - £1.1 billion ($5 million - $1.7 billion). The average trailing pre-money revenue multiple was 1.98 and the median was 1.54. Of the 16 companies that generated significant revenues, 10 (63%) earned significant profits (i.e. > £1 million or $2 million), with the range being £2 million - £13 million ($3 million - $20 million). The average trailing pre-money P/E ratio and EBITDA multiple for the 10 companies that earned significant profits was 16.14 and 10.45, respectively, and the medians were 14.85 and 10.26.
Of the 13 UK companies that completed AIM IPOs during the
first half of 2015, 10 (77%) generated significant revenues during their most
recent financial year. Of these 10 companies,
five (50%) earned significant profits.
The comparative metrics for 2014 were 56% and 69%, respectively,
indicating that investors during the first half of 2015 wanted to see more
commercial traction but are willing to wait a little longer for significant
profits. Of the 10 companies from
outside the UK that completed AIM IPOs during the first half of 2015, six (60%)
generated significant revenues. Of these
six companies, five (83%) earned significant profits. The comparative metrics for 2014 were 60% and
44%, respectively, indicating that investors wanted to see the same level of commercial
traction but were demanding that more of those that generated significant
revenues had also earned significant profits.
Only one of the 23 companies that completed its AIM IPO
during the first half of 2015 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. One additional company that completed its AIM
IPO during the first half of 2015 did so by simultaneously being acquired by an
Investing Company listed on the LSE’s Main Market and raising fresh capital; the
Investing Company then delisted from the Main Market and the acquired operating
company emerged on AIM. During 2014,
only one of the 82 AIM IPOs utilized the fast track route and the UKLA Official
List 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.
No company that completed its IPO on AIM during the first
half of 2015 migrated to AIM from the UK’s ICAP Securities & Derivatives
Exchange (ISDX, formerly the PLUS Stock Exchange and formerly OFEX). During 2014, 2013 and 2012, four of the 82
companies, six of the 62 companies and two of the 45 companies, respectively,
that completed their IPOs on AIM were previously listed on the ISDX.
One final point to note during the first half of 2015 is
that one company simultaneously completed its IPO on AIM and the Enterprise
Securities Market of the Irish Stock Exchange (ESM).
Consumer Services
(5)
|
One is a leading UK automotive dealership and leasing
group, one is a UK-focused, real money, bingo-led online gaming operator, one
owns and operates five luxury beachfront hotels and a beachfront restaurant in
Barbados, one has developed a proprietary, artificial intelligence based software
platform that enables the automation and optimization of online advertising
campaigns and one is the leading retailer of gasoline and premium food and
hot beverages along motorways in the Republic of Ireland with a growing
presence in the UK
|
Industrials
(5)
|
One provides assistance and travel service products, such
as insurance policies, via a B2B2C business model worldwide, one is the UK’s
leading provider of façade access and fall arrest equipment services,
lightning protection and electrical testing, high-level cleaning and
specialist electrical and mechanical services, one provides gas heating
appliance installation and maintenance services to residential and commercial
properties and general building services, such as domestic and commercial
plumbing, electrical work and general repairs across London and South East
England, one is a China-based provider of air filtration and clean air
technology products to the industrial, commercial and residential markets and
one is a mid-sized, UK commercial law firm
|
|
(4)
|
One is an Investing Company that intends to identify,
acquire and invest in Chinese-based SMEs with technology and/or IP in the
education sector that can be leveraged through the company’s existing contacts
at local and international higher education institutions for the provision of
online vocational training video courses for industrial workers, one is an
Investing Company that intends to invest in UK and Chinese businesses or
projects that are seeking to expand and/or establish themselves
internationally in the media and entertainment sectors, primarily theatre
production and the music industry, one is an Investing Company that intends
to buy, fix and sell businesses in the European Telecommunications, Media and
Technology (TMT) sector that are focused on network-based communications
and/or entertainment and one is one of the UK’s leading providers and
administrators of Self-Invested Personal Pensions (SIPPs) and Small
Self-Administered Schemes (SSASs)
|
Healthcare
(3)
|
One is a UK-based drug discovery and development company focused
on improving the characteristics of existing drug classes to create highly
differentiated, best-in-class new drugs in the areas of cancer and infectious
disease where their oncology-related drug programs encompass immuno-oncology
and their anti-infective drug programs have the potential to produce one of
the first new chemical classes of antibiotics in a generation, one is a U.S.-based,
clinical stage biopharmaceutical company specializing in the development of
novel antibiotics designed to be effective against serious and life-threatening
infections caused by multidrug resistant bacteria and one is a U.S.-based pharmaceutical
company that uses its proprietary computational drug discovery platform to
generate multiple, chemically-diverse, novel drug candidates for each of its
drug programs by accurately modeling molecular interactions, developing
sophisticated optimization algorithms and the computer integration of
synthetic and medicinal chemistry knowledge, resulting in the design of novel
potential therapeutics for medical conditions in anticoagulation, diabetic
macular edema and oncology
|
Consumer
Goods
(3)
|
One is a leading Chinese producer and processor of frozen
seafood, seaweed-based foods and marine snack foods for the domestic market and
for export to Japan, South Korea and the U.S., one is one of the largest UK-based
online retailers of musical instruments and music equipment, selling
third-party and own-branded products to customers ranging from beginners to
musical enthusiasts and professionals in the UK and Continental Europe
through its internally-developed ecommerce platform, with multilingual,
multicurrency functionality presented on custom-designed websites in 19
countries and one is one of the largest retailers of fishing tackle in the
UK, catering to all types of anglers - coarse, carp, game and sea fishing -
operating online and from a chain of seven retail outlets in the North of
England, which are designed to be ‘destination' stores with a comprehensive
range of products, knowledgeable and enthusiastic staff and an offering that
includes own-branded products
|
|
(2)
|
One is a software developer and operator of its own online
brokerage that has developed a simplified trading platform for themselves and
other online brokers in Europe, with expansion plans focused on Japan, China
and the U.S., to provide individuals with the ability to trade binary options
and one is a leading provider of satellite broadband services to consumer and
business users in the UK and Europe where they intend to continue to grow the
subscriber base organically and through acquisition by consolidating a fragmented
market across Europe where 20 million homes and businesses are not expected
to be able to access broadband speeds of more than 2 Mbps for the foreseeable
future via fixed line broadband networks, falling into what is called the
‘digital divide’
|
Basic
Materials
(1)
|
This company is focused on the discovery and development
of high-quality iron ore projects in Africa, initially focusing on Gabon
|
