AIM delistings rise but market shows signs of improvement
06 January 2010
 The number of companies delisting from London’s Alternative Investment Market rose to 73 in the fourth quarter of 2009, up from 63 companies in the previous three months.
However, 17 companies were admitted to AIM in the same period (excluding readmissions), which was the highest quarterly total since the second quarter of 2008, although its was still way off the 56 that joined in the fourth quarter of 2007.
The unexpected jump in delistings brought an end to a gradual fall in the number of market exits seen throughout last year. The research by City law firm Trowers & Hamlins and accountancy group UHY Hacker Young suggests that the rise was largely triggered by an increase in the number of takeovers.
Twenty-three of the delistings, or 32%, were due to AIM companies being taken over in the fourth quarter versus 13 takeovers in the third quarter. Twenty-two companies had to delist because of insolvency or financial stress – down from 27 in the previous quarter. However, the figure is still over double the amount that cited insolvency or financial stress as their reason for delisting a year ago.
Charles Wilson, a partner at Trowers & Hamlins believes that the increase in delistings this quarter is not wholly bad news for AIM because so many of the cancellations have been driven by takeover activity.
He said: “Some of the more recent takeovers of AIM companies have been launched by management or by majority shareholders - it is a positive sign when insiders are willing to initiate takeovers of AIM companies they are involved in.”
However, the researchers say there has been a worrying bounce in the number of companies citing the costs of an AIM listing as their reason for delisting – up from six in the third quarter to 14 in the fourth.
Laurence Sacker, a partner at UHY Hacker Young, said: “AIM is clearly not out of the woods just yet and these figures show its recovery is still quite mixed.
“Sentiment about AIM has improved considerably over the last year but unfortunately investors should expect that many more AIM companies will become insolvent before the UK economy returns to its pre-recession size. There are still a lot of walking wounded out there.”
A total of 498 companies have now delisted from AIM in the last two years – 280 in the last 12 months.
Elsewhere, the research shows that only two companies delisted from AIM in the fourth quarter because of the resignation of their Nominated Advisor, down from 22 a year earlier.
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