The number of companies listed on the Alternative Investment Market (AIM) has fallen for the third year running. Once again, more companies departed (one way or another) than new listings, or initial public offerings (IPOs).
There are 962 companies listed on the AIM market as we close 2017, a long way off the 1,694 peak in 2007.
The net reduction of companies during 2017 is 16, compared to 59 departures, coincidentally, in both 2015 and 2016.
A total of 75 firms either went to the wall, were taken over or failed to meet listing rules.
There were 59 new listings in 2017, about on track with the past 10 year average of 61.
FEWER OVERSEAS FIRMS
A study by UHY Hacker Young, the accountancy firm, observes fewer foreign companies joining London's junior market this year. This may come as a relief to many investors given the often poor performance of overseas listings.
Brexit may also be a reason why some smaller companies are holding fire on flotation plans, the research suggest. Clearly this has created lots of uncertainty and entrepreneurs remain nervous about the level of impact the UK leaving the EU may have on the UK’s capital markets.
STILL A GREAT PLACE FOR GROWTH
The number of AIM IPOs this year was a stark improvement on 2016, with new listings up 34% on last year.
It is also worth noting the reduction in AIM departures due to financial mis-management leading to insolvency. Nine left for this reason in 2017, compared to 24 in the previous 12 months.
This plays into the widely held belief that while the ultimate number of AIM companies continues to fall, the quality of of businesses on AIM is on the rise.
And investors can access excellent returns from junior market companies, with careful stock selection, as Shares recent update on the AIM market's performance shows.
