The average secondary offering on AIM during 2015 raised the equivalent of $12 million, 50% more than 2014. 57% of all AIM-listed companies completed a secondary offering during 2015, a feature of the market that has been consistently rising; 2011: 45%, 2012: 48%, 2013: 54% and 2014: 55%. 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.
The distribution of gross funds raised from secondary offerings retained its 'barbell' pattern during 2015, with raises of less than £3 million ($5 million) and more than £10 million ($15 million) accounting for 85% of the activity. Coming out of the global financial crisis, which lingered in Europe through 2012, 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 thirsty for capital.
Unsurprisingly, approximately 61% of the 1,044 companies listed on AIM have their main place of operation in the UK, however, the UK has only accounted for 50% of all AIM IPOs since 2011. There has been a relative surge of AIM IPOs since 2011 from China, Africa and the U.S., accounting for 9%, 7% and 7%, respectively. The internationalization of AIM is expected to continue, however, the focus should shift strongly towards the U.S.
Healthcare and technology-enabled businesses have been, and will be, the main growth drivers on AIM; sectors that are particularly well represented in the U.S. China is in turmoil and investors fundamentally don't trust Chinese companies. The vast majority of African IPOs were natural resource focused, which is a sector that is currently closed to investment. This leaves the U.S. as undoubtedly best placed to capitalize on the continuing internationalization of AIM.
Highlights
- After a two year bull market for AIM IPOs, 2015 was a year to digest the new entrants
- £4.9 billion ($7.4 billion) raised in secondary offerings during 2015, the most since 2010
- Secondary offerings on AIM raised 51% more during 2015 than 2014
- Sustainable economic growth has gathered pace in the UK and the U.S.
- AIM is in its 20th year; the companies are maturing and require acquisition capital
- Ratio of secondary offering to IPO funds raised returns to pre bull market levels
2011 - 6.46:1
2012 - 3.57:1 2013 - 2.65:1 2014 - 1.16:1 2015 - 7.59:1
- Unsurprisingly, 61% of the 1,044 companies listed on AIM are based in the UK
- Since 2011, UK has captured only 50% of IPOs, China 9%, Africa 7% and the U.S. 7%
- The internationalization of AIM is expected to continue but focus should shift to the U.S.
- Healthcare and technology-enabled businesses were, and will be, the main drivers
- 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 50% during 2015 compared to 2014
2013 - £4.58m ($6.87m) 2014 - £5.39m ($8.09m) 2015 - £8.11m ($12.17m)
- Consistent rise in the relative number of AIM-listed companies completing secondaries
2011 - 45% 2012
- 48% 2013 - 54% 2014 - 55% 2015 - 57%
- Distribution of secondary offerings continued to ‘barbell’ during 2015
- < £3m and > £10m raises were 80% of activity, now 85%
- £3m - £10m raises were 20% of activity, now 15%
IPO Funds Raised
(in £ millions)
|
Secondary Offering
Funds Raised
(in £ millions)
|
|
2011
|
560
|
3,616
|
2012
|
695
|
2,478
|
2013
|
1,025
|
2,716
|
2014
|
2,818
|
3,269
|
2015
|
650
|
4,936
|
Total
|
5,748
|
17,015
|
Since the London Stock Exchange launched AIM in 1995, an
aggregate of £96 billion ($144 billion) has been raised for growth-oriented
SMEs, £41 billion ($62 billion) for IPOs and £55 billion ($82 billion) for Secondary
Offerings.
The table above shows that after a two year
bull market for AIM IPOs, 2015 was a year for the market to digest all of the
new entrants. This is evidenced by the
fact that £4.9 billion ($7.4 billion) was raised during 2015 in secondary
offerings, the most since 2010. UK
equities’ markets also faced four major political and macroeconomic headwinds
during 2015; the UK General Election, a resumption of the Greek debt crisis,
the continuing collapse of the energy and commodity sectors and general market
volatility triggered by China and other emerging markets and the U.S. Federal
Reserve. The two political headwinds
have been ameliorated; the UK General Election was definitive and positive for
business and Greece has taken a more reasonable and realistic position with the
EU, however, the two macroeconomic headwinds will likely linger throughout
2016.
Secondary offerings on AIM raised 51% more during 2015 than
2014. Beyond simply digesting all of the
new entrants from the 2013/14 AIM IPO bull market, sustainable economic growth
has gathered pace in the UK and the U.S.
AIM is now in its 20th year and the companies listed on the
market are maturing and require acquisition capital. The ratio of secondary offering funds raised
to IPO funds raised was 7.59:1 during 2015, reminiscent of the 2011 pre bull
market level of 6.46:1, as opposed to achieving near parity at 1.16:1 during
2014.
Unsurprisingly, approximately 61% of the 1,044 companies listed on AIM have their main place of operation in the UK, however,
the UK has only accounted for 50% of all AIM IPOs since 2011. There has been a relative surge of AIM IPOs
since 2011 from China, Africa and the U.S., accounting for 9%, 7% and 7%,
respectively. The internationalization
of AIM is expected to continue, however, the focus should shift strongly
towards the U.S.
Healthcare companies listed on AIM and technology companies listed on AIM have been, and
will be, the main growth drivers; sectors that are particularly well
represented in the U.S. China is in
turmoil and investors fundamentally don’t trust Chinese companies. The vast majority of African IPOs were
natural resource focused, which is a sector that is currently closed to
investment. This leaves the U.S. as
undoubtedly best placed to capitalize on the continuing internationalization of
AIM.
The table below shows that gross funds raised from secondary
offerings rose by 51% during 2015 compared to 2014. With a similar number of secondaries in each
year, the average size of secondary offerings rose by 50% to £8.11
million ($12.17 million). Many companies
listed on AIM have achieved significant scale and are using the secondary
offering market to raise substantial amounts of additional capital to
aggressively acquire competitive and complementary businesses.
Number of
Secondaries*
|
Gross Funds Raised
(in £ millions)
|
Average Funds
Raised
(in £ millions)
|
|
2013
|
593
|
2,716
|
4.58
|
2014
|
607
|
3,269
|
5.39
|
2015
|
609
|
4,936
|
8.11
|
Total
|
1,809
|
10,921
|
6.04
|
* This is the number of discrete secondary
offering transactions. Some companies
completed more than one secondary offering per year.
There has also been a consistent rise in the relative number
of AIM-listed companies completing secondary offerings, with more than 50%
completing a secondary offering in each
of the last three years. 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.
The table below shows that the distribution of gross funds raised from secondary offerings retained its ‘barbell’ pattern during 2015, with raises of less than £3 million and more than £10 million accounting for 85% of the activity. The fact that 4% of the activity shifted from raises of less than £3 million to raises ranging from £10 million to £50 million is consistent with the previous commentary regarding the average size of secondary offerings on AIM rising by 50% during 2015. The chart below the table provides more detail.
(in £ millions)
|
2012
|
2013
|
2014
|
2015
|
< 3
|
70%
|
71%
|
74%
|
70%
|
3 - 10
|
20%
|
17%
|
15%
|
15%
|
10 - 50
|
9%
|
11%
|
8%
|
12%
|
> 50
|
1%
|
1%
|
3%
|
3%
|
Coming out of the global financial crisis, which lingered in
Europe through 2012, 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 using the
secondary offering market to raise substantial amounts of additional capital to
aggressively acquire competitive and complementary businesses.
