When I spoke at the Reverse Merger 2007 Conference in San Francisco last month, I kicked off my Panel with a slide depicting the three greatest lies and their authors:
The more astute amongst my readers – hopefully a large number – will notice that there are actually four lies on the chart. This was a joke that I thought was immensely funny in California – ie even the number was a lie – but I’m afraid that it only served to confuse my audience who were there for the serious business of finding ways to avoid a straight IPO on Nasdaq and weren’t in the mood for humour.
The London Stock Exchange (and owner of AIM) has just released the data from the first half of 2007 which add further proof – if more were needed – that the top two Great Lies are just that that – lies.
To understand my confidence in that claim, it is necessary first to take a look at the size and shape of AIM measured by the market’s overall capitalization, the number of companies on the market and the amounts of money raised for how many companies.
MARKET CAP
As you will see from the table, the geometric growth of the market is captured in its total value of $215bn.
Smaller than Nasdaq is today, but hardly irrelevant!
Although this was calculated at the embarrassingly high conversion rate of $2 to £1 (which, by the way, makes a Starbucks Skinny Grande Latte cost $4.50 in London!) the conversion rate is constant throughout the table and so the comparisons are not skewed by exchange.
For those interested in trajectories, that $215bn is double the closing value of 2005 ($107bn) and four times the aggregate market cap at the end of 2004 ($60bn).
NUMBER OF COMPANIES LISTED
At June 30th 1,656 companies were quoted on AIM – twice the number at the beginning of 2004. And, although it’s not shown on the chart, 600 of that 1,656 had a market cap greater than $75m – the SEC’s SOX cut-off for small companies.
AMOUNTS OF MONEY RAISED
Great tales of scale are always interesting, but not particularly relevant if you are the leader of a company – all you care about is “what’s in it for me?”
The same chart gives a clue to the answer if you take a look at the sheer waves of money raised on the market – nearly $20bn so far this year. And, more importantly, the majority of it was in secondary (further) rounds showing the maturity of the market’s liquidity profile.
AIM is clearly in its stride as ‘safe’ market for earlier stage companies – ie Sandvine and OCZ rather than Microsoft and Motorola.
But as important is the data that supports the market’s claim to be
"The most successful growth market in the world."
This next slide shows how AIM has evolved from its origins as a largely domestic exchange to welcoming an ever-increasing proportion of international companies to its ranks - 28% in the first 6 months of 2007.
Of even greater interest to tech company heads is how much money is raised for each IPO.
The answer is an average of $48.5m in the first six months of 2007 which is consistent with, although marginally up on the last 18 months average of $44m, as shown below:
And the last question answered firmly by the first half’s numbers is “What’s the liquidity like?”
This is always the thorny one because, as every American student of AIM knows, this is supposewd to be AIM’s Achilles’ heel.
Well, be prepared to be shocked (again!) as the last slide shows – it may well once have been true that liquidity was volumetrically low – but not since 2003.
An average of 550m shares worth $460m traded daily from January to June this year.
It was a cynic of another age who once dismissed numerical analysis with the throwaway line
"there are lies, damned lies and statistics".
But even he would be hard pressed to defend the three greatest lies (or four if you haven’t been following) in the face of such overwhelming statistics.
That being said, the tech world is full of cynics, so if any of my readers are interested in challenging the conclusion that AIM is
a) alive & well,
b) welcoming to non-UK companies and
c) a place where significant funds are raised for companies that go on to grow rapidly after years of imprisonment in private hands,
go run your own slide rule over the numbers –they’re to be found here.
And then ask just why only 13% of the International companies listed on AIM are from the USA.
Beats the heck out of me!
Well said, Ken.
Posted by: REG CROWDER | July 16, 2007 at 05:16 PM