Today's Financial Times carries a chillingly headlined piece announcing that AIM IPOs have "slumped" this year.
Further down, and in much smaller print the article's authors - David Blackwell and Brooke Masters - concede that "the drop is not unique"
Damn right it isn't!
As the chart below shows, the FT's three key markets - Nasdaq, AIM and Frankfurt are all down massively on IPO volumes year on year:
Actually, I don't know why they bothered with Frankfurt - it must be something to do with the War!
And unless you are using a magnifying glass you might miss that AIM has raised more money this year than Nasdaq.
But jingoism aside - the message is stark.
As any sane market pundit would expect - no one is floating in the eye of a bear mid-credit crunch/US recessionary/pre-election market.
Actually, that's not true.
So far this year (to the end of April) 40 companies have IPOed on AIM.
32 were domestic UK companies, 4 were from offshore tax havens, 1 was from the Republic of Ireland (which is becoming something of an offshore tax haven in its own right!) and - amazingly - 2 were from the USA! And both were technology businesses
Phibro Animal Health from Ridgefield Park, NJ raised $45m in April and Lifeline Scientific from Chicago, IL raised $11m back in January.
Phibro, with offices in in Argentina, Australia, Belgium, Brazil, Canada, China, Hong Kong, Malaysia, Mexico, South Africa and Venezuela. Manufacturing facilities are located in Belgium and Brazil makes animal pharmaceuticals.
Lifeline is a global medical technology company with a family of technologies designed to improve the quality and availability, of vital organs, tissues and cells for transplantation and medical research.
So, although, as the FT article points out, these are rough times for IPO-hungry investment banks whose engines run on the fees from listings, there is still life and hope on the public markets.
Not that we should get too excited about two adds to the US AIM gene pool.
True they do add 5% to the number of US registered companies on AIM - bringing the total up to 45. But that is likely to fall again unless Maxjet manages to pull something spectacular out of the bag. (You have to feel sorry for the low-cost business-only airline - the only sector worse hit than IPO investment banks is fuel-hungry budget airlines!)
Sympathy for Maxjet and ailing investment banks aside it's worth thinking through what all of this means for that vast inventory of still-private tech companies that I described in an earlier blog.
Today's travails present two big opportunities:
1. As Phibro and Lifeline show - there is still money around for quality technology companies on AIM; and
2. The down drafts of the bear market have left a vast supply of asset-strong but market-cap weak companies on AIM ripe for reverse mergers for ambitious US companies with a growth story to tell.
Food for thought....
Good points that needed to be said.
Well done, Ken!
Frankfurt is worth watching because a steady stream of small US companies are doing what I call "invisible IPOs" in Frankfurt. They are building their "fan club" by taking on a second listing in Frankfurt to enhance their existing Nasdaq listing. As I understand it, if you are already on Nasdaq, it is fairly cheap and easy to piggy-back a Frankfurt symbol onto your Nasdaq symbol. (They aren't raising any new money in Frankfurt that I can see.)
But I don't really believe anybody at the FT knows any of this.
By the way, I'd like to invite you and your readers to drop by my NEW Google Knol entitled, "International Investing." This is the URL:
http://knol.google.com/k/reg-crowder/international-investing/6dyptd3yjxyq/2
It is targeted to American ("get out while you can") and Canadian ("For God's sake, you can't expect to hit oil, gold, copper, silver and diamonds EVERY TIME you dig a tomato patch in Canada FOREVER ...") middle-income family investors.
HOWEVER, I turned up some new data on the fantasy of global equity market convergence that almost ANYBODY could find useful.
All the best.
REG CROWDER
Freelance Financial and Investment Writer
London, England and Brittany, France.
Posted by: REG CROWDER | August 05, 2008 at 09:52 AM