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AIM facing struggle as firms delist

AIM facing struggle as firms delist

THE Alternative Investment Market (AIM) has continued to struggle in the past year, with more companies delisting and fewer IPOs, according to a new report.

A total of 105 companies quit the market in the past year - a rise of 18 per cent, with just 35 companies floating, the report by accountancy group UHY Hacker Young said.

The net decrease in the number of companies listed on the AIM was 70 - hugely up on the 2014/15 figure of 12 and the 2013/14 total of three.

Financial stress and insolvency was the biggest reason for companies exiting the market, responsible for a total of 27 delistings, UHY Hacker Young said.

Some 20 firms delisted due to the resignation of their 'nominated advisor' or Nomad - having such a representative is a requirement of all AIM-listed companies.

UHY Hacker Young said that many such Nomad resignations related to risk-aversion, and said this was a particular problem for Chinese AIM-listed companies due to ongoing uncertainty over corporate governance.

AIM facing struggle as firms delist

Of the delisting companies, some 28 per cent were oil and gas or mining firms, UHY Hacker Young said. Plummeting world oil prices and a fall in demand for metal linked to the Chinese economic slowdown have created a difficult environment for such companies.

The number of companies floating on the AIM was down 55 per cent on 2014/15 when there were 77 IPOs. The past year saw the lowest level of IPO activity since 2009/10.

AIM facing struggle as firms delist

AIM facing struggle as firms delist

The amount of funds raised for IPOs also decreased by 53 per cent, to & pound; 624million. Laurence Sacker, a partner at UHY Hacker Young, said: "The resolutely low oil price, the continuing slack Chinese demand for commodities and the lower-risk approach taken by Nomads have combined to make the past year a very difficult one indeed for AIM.

"There does not appear to be any immediate respite on the horizon for any of those issues, which suggests that the coming year may not deliver the upturn AIM companies are hoping for.

"China has long been a good source of companies for AIM, but with Nomads now gun-shy over representing Chinese clients, Chinese companies may now choose to look elsewhere."

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