The number of companies delisting from London’s Alternative Investment Market (AIM) has soared past pandemic-era highs over the last year as the stock exchange struggles to keep smaller companies on board.
A total of 76 companies delisted from AIM in the last year, up 62 per cent from the 47 delistings in the previous year, research from UHY Hacker Young has revealed.
This compares to a pandemic-era high of 67 companies leaving AIM in the 2019-20 financial year.
Earlier this month, City A.M. revealed that the number of companies listed on London’s smallcap market had cratered 30 per cent from 1,104 in 2015 to just 742 at the end of February.
The reasons cited by the companies delisting in the last year included the high cost and time required to comply with AIM obligations (seven companies), the low share price they have achieved on AIM (two companies), and financial stress or insolvency (12 companies).
Just last week, Scirocco Energy, an AIM-listed investing company focused on green energy, moved to cancel its listing due to the “considerable cost and management time and the legal and regulatory burden” from listing.
Colin Wright, partner and group chair at UHY Hacker Young, said that boosting AIM’s competitiveness was “not going to be achieved overnight”, but there were clear steps to take to reduce the regulatory burden on companies.
“The London Stock Exchange has taken a number of steps in recent years to improve the quality of AIM listings, however, it is worth keeping those measures under regular review to see how much value investors really think they provide,” he said.
“An AIM listing is meant to be relatively low cost and light touch in terms of regulation.”
Despite this, an IPO on AIM will currently cost about £500,000, plus fees for RNS announcements, legal costs, and other expenses add around £200,000 a year to that.
“The challenge AIM now faces is to strike the balance between continuing to enforce high regulatory standards and creating a compliance culture that is flexible enough that it motivates businesses to remain listed,” added Wright.