28% of all AIM-listed companies completed a secondary offering during the first half of 2015. The distribution of gross funds raised from secondary offerings during H1 2015 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.
Sustainable economic growth has gathered pace in the UK and the U.S. Unsurprisingly, approximately 60% of the 1,068 companies currently listed on AIM have their main place of operation in the UK and the UK has accounted for 59% of all AIM IPOs since 2013. Healthcare and technology-enabled businesses have been the main drivers of the current bull market, sectors that are particularly well represented in the U.S.
Since 2013, there has been a relative surge of AIM IPOs from China, the U.S., Israel and Africa, accounting for 8%, 5%, 5% and 4%, respectively. The internationalization of AIM is expected to continue, however, the focus should shift towards the U.S. since China is in turmoil and investors fundamentally don't trust Chinese companies and the vast majority of African IPOs were natural resource focused, which is a sector that it currently closed to investment.
Highlights
- £2.4 billion ($3.7 billion) raised in secondary offerings during the first half of 2015
- Secondary offerings on AIM raise 20% more during H1 2015 than H1 2014
- Sustainable economic growth has gathered pace in the UK and the U.S.
- Companies are maturing, as is AIM in its 20th 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
- Healthcare and technology-enabled businesses have been the main drivers
- Pause in the 18-month bull market for AIM IPOs during H1 2015 due to:
- UK General Election, which was definitive and therefore good for markets
- Resumption of the Greek debt crisis, which appears to be resolving itself
- Ratio of secondary offering to IPO funds raised returns to pre bull market levels
H1 2013 - 4.19:1
H2 2013 - 2.13:1 H1 2014 - 1.06:1 H2 2014 -1.36:1 H1 2015 - 5.04:1
- The internationalization of AIM is expected to continue but focus should shift to the U.S.
- Since 2013, UK captures 59% of IPOs, China 8%, the U.S. 5%, Israel 5% and Africa 4%
- China is in turmoil and investors fundamentally don’t trust Chinese companies
- African IPOs were natural resource focused, sector currently closed to investment
- Average size of secondary offerings rose by 22% during H1 2015 compared to H1 2014
H1 2013 - £4.32m ($6.70m) H2 2013 - £4.77m ($7.39m)
H1 2014 - £6.41m ($9.94m) H2 2014 - £4.34m ($6.73m) H1 2015 - £7.81m ($12.11m)
- Distribution of secondary offerings continued to ‘barbell’ during the first half of 2015
- < £3m and > £10m raises were 82% of activity, now 87%
- £3m - £10m raises were 18% of activity, now 13%
- Step-change up in the relative number of AIM-listed companies completing secondaries
H1 2013 - 23% H2
2013 - 32% H1 2014 - 28% H2 2014 - 27% H1 2015 - 28%
IPO Funds Raised
(in £ millions)
|
Secondary Offering
Funds Raised
(in £ millions)
|
|
H1 2013
|
258
|
1,080
|
H2 2013
|
767
|
1,636
|
H1 2014
|
1,858
|
1,968
|
H2 2014
|
960
|
1,301
|
H1 2015
|
468
|
2,359
|
Total
|
4,311
|
8,344
|
Since the London Stock Exchange launched AIM in 1995, an
aggregate of £93 billion ($144 billion) has been raised for growth-oriented
SMEs, £40 billion ($62 billion) for IPOs and £53 billion ($82 billion) for
Secondary Offerings.
The table at the bottom of the previous page shows that
there was a pause in the 18-month bull market for capital raised from 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), which is positive for business, and Greece has taken a
more reasonable and realistic positon with the EU, the expectation is that capital
raised from AIM IPOs will return to ca. £1.0 billion ($1.6 billion) during the
second half of 2015. The ratio of
secondary offering funds raised to IPO funds raised was 5.04:1 during the first
half of 2015, reminiscent of the pre bull market level of 4.19:1 experienced
during first half of 2013, as opposed to the 1.37:1 during the intervening 18
months.
Sustainable economic growth has gathered pace in the UK and
the U.S. Unsurprisingly, approximately 60%
of the 1,068 companies currently listed on AIM have their main place of
operation in the UK and the UK has accounted for 59% of all AIM IPOs since
2013. Healthcare and technology-enabled
businesses have been the main drivers of the current bull market, sectors that
are particularly well represented in the U.S.
Since 2013, there has been a relative surge of AIM IPOs from
China, the U.S., Israel and Africa, accounting for 8%, 5%, 5% and 4%,
respectively. The internationalization
of AIM is expected to continue, however, the focus should shift towards the
U.S. since China is in turmoil and investors fundamentally don’t trust Chinese
companies and the vast majority of African IPOs were natural resource focused,
which is a sector that is currently closed to investment.
The table below shows that gross funds raised from secondary
offerings rose by 20% during the first half of 2015 compared to the
first half of 2014 and spiked by 81% compared to the second half of 2014. In addition, the average size of secondary
offerings rose by 22% during the first half of 2015 compared to the
first half of 2014 and spiked by 80% compared to the second half of 2014. Both of these patterns are consistent with
the fact that as the companies on AIM continue to mature, with AIM now in its
20th year, they are seeking larger amounts of capital so as to
execute upon acquisition campaigns.
Number of
Secondaries*
|
Gross Funds Raised
(in £ millions)
|
Average Funds
Raised
(in £ millions)
|
|
H1 2013
|
250
|
1,080
|
4.32
|
H2 2013
|
343
|
1,636
|
4.77
|
H1 2014
|
307
|
1,968
|
6.41
|
H2 2014
|
300
|
1,301
|
4.34
|
H1 2015
|
302
|
2,359
|
7.81
|
Total
|
1,502
|
8,344
|
5.56
|
* This is the number of discrete secondary
offering transactions. Some companies
completed more than one secondary offering per half-year.
The table below shows that the distribution of gross funds
raised from secondary offerings returned to its ‘barbell’ pattern
during the first half of 2015. Coming
out of the global financial crisis, London's 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. The chart below the
table provides more detail.
(in £ millions)
|
H1 2013
|
H2 2013
|
H1 2014
|
H2 2014
|
H1 2015
|
< 3
|
71%
|
71%
|
73%
|
74%
|
72%
|
3 - 10
|
18%
|
16%
|
12%
|
18%
|
13%
|
10 - 50
|
10%
|
11%
|
12%
|
6%
|
12%
|
> 50
|
1%
|
2%
|
3%
|
2%
|
3%
|
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.
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