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The value of funds raised on AIM dropped by more than 60 per cent in the first quarter of 2008 compared with the same period the year before. 

The largest drop was seen in the value of primary issues, which were 70 per cent down on the previous year, according to the latest AIM analysis by Grant Thornton Corporate Finance.

There was still more than £1.13 billion raised on AIM despite "one of the most challenging backdrops for the market since its inception", however, according to Philip Secrett, international director of capital markets at Grant Thornton.

The value of new issues on AIM was £339 million in Q1, a drop of more 70 per cent on the previous year (Q1 2007: £1.124 billion), while secondary issues fell by 53 per cent to approximately £793 million (Q1 2007: £1.690 billion).

In total, AIM raised primary and secondary issues of more than £1.132 billion in the first three months of the year, compared with £2.815 billion in Q1 2007.

Secrett said the value of funds raised in 2008 were in the short term unlikely to move back in line with the fundraising levels of the prior three years, a period that had seen an extraordinary explosion in the level of funds raised.

"The surprise with the performance of AIM during the first quarter of this year is not that it has suffered as a result of the credit crunch and resulting equity market turmoil, but that its constituents were still able to raise over £1 billion in primary and secondary issues," Secrett continued.

The volume of new companies listing also dropped to 34 in the first quarter of the year, down from 54 in Q1 2007.

Despite the downturn, Secrett said several sectors remained popular amongst AIM investors, particularly energy and commodity firms, which represented over 50 per cent of primary issues raised during the quarter.

While AIM continues to set the standard for growth markets around in the world, Secrett believes there needs to be heavy and ongoing promotion of the opportunities the market can provide in the developing world, as the strong economic growth rates throughout Asia and within Eastern Europe can provide both investment and new listings at a time when the UK economy has slowed.

“AIM continues to be open for business but only for those companies with stories that are in line with the very specific demands of investors at present. Investors are now sitting on their hands, and while they may be more willing to participate in secondary issues for AIM listed firms they already know, raising substantial sums of money for new companies will only be an option for a select few," Secrett concluded.

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Related links

• Grant Thornton
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