Before we get carried away with the idea that AIM is the answer to all our capital-raising desires, heed the warning of KPMG. Not all is rosy in the garden of AIM.
Indeed, for every upside – AIM managed to raise £2.6bn for companies last year – there’s a downside and KPMG is quick to point it out. In short, the last three years has seen 360 companies de-list from the market. That’s more than the number of new entrants last year alone.
The shock story is that, of those that bailed out, 108 did so for what KPMG describes as ‘more negative reasons’. These include the index reaching an all-time low last year, breaches of AIM rules, burdensome corporate governance requirements, the high cost of compliance with AIM rules and the large amount of time needed from senior people to manage investor relations.
What is shocking is that these are factors at all. After all, what did the executives in charge expect – capital with absolutely no obligation? Nothing is free in this world, and that these factors should take anyone by surprise is breathtaking. For instance, take the complaint that investor relations are too time consuming. Well, maybe we should think again before letting the owners of the company know anything at all about its workings.
And then there’s the high cost of compliance with AIM rules. Maybe they’re right. AIM is already known as one of the most user-friendly, light-touch markets around but, maybe we could do without rules altogether?
Apologies for the sarcasm – I’ll put it to one side for the moment. The real issue is, should managers of AIM make changes to keep companies on board?
KPMG seems to think not. David Simpson, head of its UK-quoted company team, says the light-touch regulation will maintain AIM’s position as a popular place to do business.
Besides, the rest of the exits were for better reasons, such as reverse takeovers, takeovers by other public companies and moving to a full market listing.
This is an ‘appetising range of targets’ for exit, according to Simpson and there’s no arguing with that. AIM looks like it has plenty of shelf-life left after all.
Gavin Hinks is deputy editor of Accountancy Age.