Aim hit by credit squeeze as fundraising slumps 60%

Published on Thursday 24 April 2008 21:39

FUNDRAISING via London's junior stock market has hit its lowest level in three years according to a new report, providing further evidence of the extent of the credit squeeze.

Quarterly analysis of the Alternative Investment Market (Aim) by business advisory firm Deloitte reveals a 60 per cent slump in activity during the opening three months of the year.

Total funds raised on Aim fell to just 1.1 billion, compared with some 2.8bn a year earlier and 3.1bn in the final quarter of 2007.

January was found to be the lowest month for new fundraising since February 2004 at just 27 million.

Craig Campbell, corporate finance director at Deloitte in Scotland, said: "The slump in activity on Aim demonstrates just how sensitive alternative investments are to an economic downturn.

"The worst of the downturn was expected to hit Aim in the second half of 2007, but a flow of IPOs (initial public offerings] in the pipeline kept the overall numbers afloat.

"Figures for 2008 show, however, that the trickle has dried up."

Of the 32 companies that were admitted to Aim in the first quarter, half were transactions that involved no fundraising at all. This compares with about 30 per cent in the previous quarter.

During the period, there was an increase in secondary fundraising levels.

"While it might be difficult to access capital at the moment, those companies that are listed will be in a good position to move quickly when conditions change," Campbell added.

"Those companies that can demonstrate successful trading results as a listed entity will be in a particularly advantageous position."

Deloitte said that during 2007, secondary fundraisings had outstripped those from new IPOs by 45 per cent.