The value of the AIM market decreased by 30% in the first half of 2022, from £150 bn to £105 bn. The tech-heavy NASDAQ and the S&P have also suffered large declines. The FTSE 100 index is up by c 1% YTD. Of course, investing in the NASDAQ or S&P over the long term (20/30+ years) would have hugely better returns than the FTSE 100. These figures highlight the importance of asset allocation.
The severity of the AIM market decline was highlighted in Allenby Capital’s AIM half-year report:
AIM Market Update – H1 2022 – Activity remains subdued
Not surprisingly, the first half of 2022 saw materially reduced levels of funds raised for AIM listed companies. With investors more concerned with the invasion of Ukraine, rising inflation and corresponding increases in global interest rates, the appetite to put fresh capital to work was muted. The markets were not completely closed, £1.33bn was raised in the half year for both new joiners and already listed companies, albeit this was down 70% on the £4.38bn raised in H1 2021.
£1.33bn raised in H1 2022
- The vast majority (92%) comprised listed companies coming back to the market for further funding.
- The IPO market remains quiet as is often the case when share prices are in decline but as we saw after the COVID impacted Q1 2020, the IPO market can bounce back quickly.
- 13 new joiners to AIM in H1 2022 compares poorly with 35 new joiners in the first half of 2021.
- The new joiners have been more than offset by 30 departures, leaving the total number of companies on AIM at 835 at the end of June compared to 852 at the beginning of January 2022.
By the end of June, AIM’s market value had decreased to £105bn.
- This was down from £150bn at the start of the year.
- At the end of Q2, 20 companies had a market cap of £1bn or over against 30 at the beginning of the year.
- The average market capitalisation of AIM companies at the end of June 2022 was £126m, significantly above the £64m average of a decade ago in April 2012.
M&A activity on AIM remains buoyant
- 16 AIM companies have been acquired in 2022 (or are currently in a bid process).
- The average bid premium when compared to the prior day’s close is +46% with a range of +2% to +129%.
- Private Equity has made seven of the bids with the other nine being trade buyers.
This is an official news item written by ShareSoc Director Cliff Weight
p.s. the AIM index has recovered by some 8% between 30th June and 9th August