The value of AIM-listed takeovers by private equity firms has reached £5bn over the last year as the number of companies on London’s junior stock exchange continues to drop.
Private equity houses continued to be the major driver of AIM M&A deals, accounting for 62 per cent of M&A deals by value, according to data from UHY Hacker Young.
However, only seven of the 27 AIM M&A deals were from private equity firms. In total, £7.8bn was spent on takeovers across the junior stock exchange.
There are now just 669 companies left on AIM, down from the 685 companies that were on the market a year earlier.
Over the past six months, the AIM 100 has significantly underperformed the main market index, falling six per cent compared to the FTSE 100’s five per cent increase.
This has left firms listed on the exchange vulnerable to takeover deals, thanks to low valuations.
High profile takeovers of AIM companies in the last year include the £432m takeover of wealth manager Mattioli Woods by private equity firm Pollen Street Capital, and KKR’s takeover of Smart Metering Systems for £1.3bn.
However, the gap that has grown between AIM companies being taken over and new companies joining AIM through IPOs shows signs of narrowing.
Last week, two new companies debuted on the junior stock exchange, with two others announcing their intentions to float.
“The interest in AIM companies from corporates and private equity houses is a sign the market is functioning well as a ‘shop window’ for growing companies,” said Colin Wright, partner and group chair at UHY Hacker Young.
“The high value of AIM M&A deals shows a lot of higher quality companies were taken off the market, particularly with the help of private equity houses. However, problems could arise if those companies aren’t replaced by new listings and some of the liquidity leaves the market.”
