Amidst all of the transatlantic bickering about AIM it is easy to lose sight of the fact that it has become a vibrant market demonstrably catering for the needs of the younger company.
Just like Nasdaq used to do in the 80s and 90s.
Sadly, although non-UK companies account for over 25% of the IPOs on AIM, the US is still noticeable by its absence.
It’s just like international soccer before the US hosted the World Cup!
The absence of any material American presence on what is patently the only market for IPOs today begs a very big question – where are they all going?
Has the US emerging tech sector undergone, what I heard described the other day as the capital market equivalent of a vasectomy?
Oodles of potential - all going nowhere?
At the root of the sector’s reticence lies a fundamental lack of knowledge of the scale and opportunity presented by the market.
To prove my point, answer the following three questions:
1. “To the nearest 10, how many companies are listed on AIM?”
2. “To the nearest $10m, what is AIM’s aggregate market cap?”
3. “To the nearest $5m, what was the average sum raised by an AIM IPO in Q1 of this year?”
To answer these and your other questions, take a look at the following data, hot of the London Stock Exchange’s databases.
To get an understanding of AIM’s scale, click on the following chart:
It shows the inexorable growth of AIM from its first wobbly start in 1995 to today’s behemoth.
And for those who are counting you will see that there are over 1600 companies listed on AIM with an aggregate market cap of $192bn (the £ is converted at $1.89 through these data).
Although AIM was a decidedly domestic market in its early days, the percentage of international companies joining has steadily increased, jumping up a level in 2004, as shown on the chart above and illustrated graphically on the next slide:
Last year was a very big year for the market with 462 companies IPOing in London. The pattern of activity showed a vague cyclical behaviour as shown below:
And it can be seen that although the City is awash with rumours of an impending tode of IPOs, so far 2007 has been relatively quiet.
Liquidity is always a big issue – along with the so-called lack of regulation it is one of the Big Two Lies about AIM perpetrated by the US bankers who would rather see young companies starved of capital than IPO abroad.
The next charge shows that not only has AIM been liquid for a long time – 2000 was the year that the volume changed – but that today’s volumes vastly exceed the height of the dot.com boom.
Admittedly the levels are far below those of Nasdaq but there are many reasons for that (not least of which is the absence of any of the big staple companies that now populate Nasdaq). The real issue for liquidity is whether or not a company can raise capital when it needs to – how healthy is the secondary market? And the answer to that can be seen on the first chart which shows that “Further” fund raisings exceeded “New” in the 1st quarter of 2007.
Equally importantly, the daily trading volumes have been rising steadily both in numbers of shares and $ volume.
All of which bring s us to the answer to the third question - $20m.
This final chart shows that the average funds raised has remained pretty constant over the last 15 months although at the back end of 2006, the average shot up to $30m.
In summary then, there is liquidity, regulation and a warm welcome in London for those tech companies who are prepared to put the interests of their shareholders ahead of some vague idea that someone, somewhere is about to slay the Four Horsemen of the Apocalypse and open up Nasdaq for business again catering for young, vibrant companies as they embark on the journey to become truly global leaders in their field.
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