AIM Crowns Its Tenth Year With New Fundraising And Admissions Record As Companies Rush To Market To Beat New Prospectus Directive Rules

The AIM market has crowned its tenth year in operation by completing its strongest ever quarter of activity in terms of new admissions and money raised during the second quarter of 2005. Between April and June a total of 144 companies have been admitted to the market, a number which represents an increase of 90% on the same quarter last year. In terms of the amount of fundraising achieved, a total of £1.5bn was raised during the quarter, equivalent to a 176% increase on the same period last year.

This quarter’s huge surge in admissions is directly linked to the introduction of the Prospectus Directive (PD) due to come into force on 1 July. Until recently, significant uncertainty surrounded the amount of additional regulation and therefore time and cost required to take a company to market under the new PD.

“Whilst much of this uncertainty has now been lifted, it contributed to more companies taking more decisive steps to float in order to beat the July 1 deadline. Unlike the previous quarter, the vast majority of new admissions are made up of trading companies rather than cash shells which in March descended on AIM en-mass in order to be beat the April 1 deadline when new more restrictive cash shell rules were introduced”, said Philip Secrett partner within Grant Thornton’s Corporate Finance team.

“The PD rules will not make any meaningful difference to companies joining AIM. In the vast majority of situations, the only implication for an issuer will be that of additional prescriptive disclosure within their AIM admission document. For a minority of issuers that are required to issue a prospectus subject to the full force of the PD, the real impact is likely to be confined to a longer admission process period and higher costs resulting from the requirement to have the prospectus pre-vetted by the UK Listing Authority. Neither are likely to significantly affect the market’s appeal to prospective companies. We expect July admissions to remain strong with fewer companies floating in August when admissions are traditionally quieter over the summer period. Overall the outlook for the year remains very positive”, concluded Secrett.

The AIM market has been in existence 10 years, first opening its doors in June 1995. It sought to plug an equity gap by providing companies with a platform for investment to start or build their activities. Currently 1053 UK and 144 international companies trade on AIM with a market value of over £37 billion. Since AIM’s inception, over £17 billion has been raised and over 1,900 companies have been admitted.