The cost of joining AIM (The London Stock Exchanges junior stock market) has fallen for the first time in seven years, driven down by competition amongst AIM advisors and brokers over the rates they charge for undertaking AIM IPO’s.
The most recent survey by accountancy firm UHY Hacker Young shows that the average costs associated with an AIM stock market flotation now equates to 8.4 per cent of all funds raised by a company on the market. This has reduced significantly from an average of 10.6 per cent in 2011. Good news too for companies considering a fundraising on AIM, with the average amount raised per AIM listing IPO in the past 12 months increasing by 37%.
This reduction in the costs of joining AIM will be welcomed by many growing companies looking to use AIM to raise growth capital. AIM now has a number of small corporate finance boutiques able to take on AIM due diligence work at lower margins than full service corporate finance firms.
AIM is now regarded globally as one of the most important stock markets for younger and growing companies to raise money and have their shares traded. By keeping the costs of joining AIM competitive, the market becomes attractive as an option for a broader range of fast-growing companies from the UK and globally.
Laurence Sacker, a partner at UHY Hacker Young says ‘’AIM advisors are now willing to be flexible over pricing in order to bring in the work needed to keep their teams ticking over’’. UHY Hacker Young’s data shows that the total amount of money raised from new listings on AIM increased by 26 per cent to £676m in 2012, up from £518m the year before.
John Holland, Managing Director of Flotation Consultants Holland Bendelow is not surprised by the fall in the costs for companies of joining AIM, he says ‘’City advisors and Brokers now understand that they are operating in a competitive market place which is becoming increasingly international’’.
The number of companies joining AIM appears to be on the increase and Holland says ‘’the number of new enquires we received from both UK and international companies seeking an AIM IPO and fundraising has risen significantly over the past 12 months. We are beginning to see the levels of new interest from growing companies seeking an AIM flotation and fundraising almost back to pre- recession levels ’’.
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