Slump hits value of Aim secondary placings

The value of Aim secondary placings slumped even more dramatically than new issues in the second half of last year as the credit crunch bit, according to research by Grant Thornton, the professional services firm.

The survey of London’s junior market found that the value of new Aim issues had risen to a record £3.5bn in the first half of the year but estimated a fall to £2.9bn in the second.

However, it found that the value of secondary issues, up to November 30, slumped from £6.2bn in the first half to an estimated £2.3bn in the second.

Even though the performance of new issues did not decline as sharply, the overall value of primary issues on Aim still dropped 35 per cent for the whole of 2007, when compared with the previous year.

High-profile casualties forced to pull floats in the second half included CambridgeSoft, a US group that develops software for the life sciences industry; Russian Timber Group, founded by Peter Hambro and Pavel Maslovsky of Peter Hambro Mining; and Ahava Black Sea Laboratories.

But a bumper first half meant that secondary issues outstripped primary issues for the first time in nine years, rising about 50 per cent to £8.6bn in 2007.

However, Philip Secrett of Grant Thornton Corporate Finance said secondary issues were lumpy and property funds had accounted for nearly half the money raised. Two funds alone, London & Stamford Property Ltd and Pacific Alliance China Land, accounted for nearly £500m of secondary issues in November.

“It points to a trend of fewer companies raising greater amounts, which is now something of a concern for a market set up to cater to growth companies, rather than competing for size with the smaller end of the main market,” Mr Secrett said.

For the year, Aim is expected to have raised a total of more than £15bn, compared with last year’s figure of £15.6bn. The number of companies listing fell more than 40 per cent to 275. By the year end, Grant Thornton expected the number of companies on Aim would be 1,689, a net gain of just 55.

“The first half of 2008 at least will see fundraising levels similar to the final quarter of 2007, with many companies in sectors including mining and technology simply postponing an IPO until market conditions improve,” said Mr Secrett.

“Domestic markets within the countries that have been particularly active on Aim, such as China and India, will be making a stronger case for their own fast-growing businesses to raise finance at home. It is true that the growth these markets are seeing does make them more attractive than in the past,” he added.