June 27, 2007

Taking AIM 2007 - Key Findings

The Taking AIM survey, undertaken by Baker Tilly in partnership with Faegre & Benson was carried out by an independent research consultancy. The survey of listed companies involved 201 companies currently quoted on AIM, 50 private companies and 51 institutional investors actively investing in companies listed on AIM.

Performance of AIM

  • Nearly 60% of AIM companies say the market's performance was ‘as expected', however more than three-quarters of investors describe AIM as performing ‘worse' than expected and only 6% ‘better'.
  • 41% of investors claim AIM's performance was due to the poorer quality of companies coming to market, however, nearly half surveyed report that AIM had a positive effect on their own funds' performance last year.
  • Most of 2006's new entrants characterise the pricing of their shares when admitted to AIM ‘as expected' (66%) and more than three-quarters raised the level of funding they had expected.
  • Nearly 60% of companies say that AIM's increasing globalisation is ‘generally beneficial', but 45% of investors are less positive describing it as ‘detrimental'.
  • Our experts remain confident in the resilience of the market and its ability to withstand volatility in individual sectors.
  • Both companies and investors, plus our panel of experts, expect the key AIM indices to rally over the next year.

Regulation and quality of companies

Partly driven by what they see as the poor quality of 2006's IPOs, institutional investors requested that AIM tightened its self-regulation. Companies are more hesitant.

  • Most companies and investors agree that AIM's self-regulation is relatively effective, describing it as either ‘very' or ‘fairly' effective.
  • Close to two-thirds of investors believe that some increase in regulation would be beneficial for the market's reputation (61%) and for investor confidence (67%).
  • Most companies (84%) rate AIM's level of regulation as ‘very good' or ‘fairly good'.
  • Despite their lukewarm view of recent market entrants, nearly half (45%) of investors surveyed believe corporate governance of AIM companies is ‘improving'.
  • Nearly half (47%) of AIM companies say they are ‘very well prepared' for IFRS compared to only 25% in last year's survey.
  • Only half (51%) of investors consider AIM companies investor relations activities effective.
  • 37% of investors surveyed suggest AIM companies devote about the right amount of time to Corporate Social Responsibility (CSR) and environmental issues, but one in five still believe management is neglecting it.

AIM versus other sources of finance

Besides rival stock markets for growth companies, AIM's competitive environment has intensified with continuing increases in private equity (PE)'s firepower and ambition.

  • Only one in five of the AIM companies interviewed considered listing on other markets.
  • Before listing, 36% of AIM companies had considered PE or venture capital (VC) as an alternative.
  • Almost all AIM companies (96%) have considered or would consider AIM for a second round of funding.
  • Many companies see themselves as likely acquirers in the next 12-18 months – and around a quarter (and a third of foreign companies) think a deal is ‘very likely'.
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