IPOs on the UK’s Alternative Investment Market have fallen to their lowest level since 2009 with only one float on the junior market in the last three months raising just £6m, shows research by UHY Hacker Young, the national accountancy group.
This makes Q2 of 2022 the worst quarter for new IPOs on AIM since the height of the last financial crisis. The last quarter to see such low levels of IPO activity was the first quarter of 2009, which also saw just one IPO, raising £3m. By comparison the second quarter of last year saw 16 IPOs, raising £218m.UHY Hacker Young says enthusiasm for IPOs has been dampened by falling equity markets over the past few months, with the AIM All-Share Index down 26% in the year to date. Growth markets worldwide have been hit by interest rate rises, with the Nasdaq Index also down 27% since the beginning of January. Colin Wright, UK Group Chairman and Partner at UHY Hacker Young says: “A lot of AIM IPOs have been shelved over the last few months. Interest rate rises have seen a lot of investors hit pause on their investment in growth shares and rotate into value shares instead.” “While we haven’t seen as quiet a period for IPOs on AIM since the last financial crisis, the similarities with 2008 end there. As yet there has been no wave of companies quitting the market or going insolvent and we expect IPOs to quickly return once this period of instability subsides. However, a full recession would change this.” UHY Hacker Young says that in the last 12 months, only 49 companies left AIM, compared to 50 last year and a record 257 in the same period in 2008/9. The firm says that this is a sign of how much the quality of companies listed on the market has improved since the financial crisis. It says this leaves AIM in a good position to bounce back after the current period of uncertainty. The London Stock Exchange has undertaken a prolonged campaign of improving the robustness of AIM over the last decade, tightening regulation and diversifying the index away from its traditional strength in smaller, more speculative resources companies. This has resulted in the number of AIM companies leaving the market because of insolvency or other forms of financial stress falling to just three in the year to the end of June 2022. Over the same period in 2008/9, 62 companies left the market due to financial stress and insolvency. Colin Wright adds: “AIM is in a different place to where it was following the financial crisis. The overall standard of companies on the market is much higher and investors know this. AIM is in a very strong position to bounce back once the economic outlook brightens.”