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| Non-UK companies to lead AIM recovery: Grant Thorton |
| Press Trust of India / New Delhi Jun 30, 2009, 16:35 IST |
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The Alternative Investment Market, an arm of the London Stock Exchange, is well- positioned to weather the current economic downturn, thanks to the large presence of Indian and other non-UK companies, says a report.
"One of its key strengths (of AIM market) lies within the diversity of AIM companies which are spread across many sectors and many of which have global operations, meaning that they rely on a broad range of economies around the world," says the report by global consultancy firm Grant Thornton.
It says an improvement in fund-raising conditions is most likely towards the end of 2009 and through 2010.
Over the past few years there have been an increasing internationalisation of AIM, with as much as 55 per cent of total market capitalisation made up by companies with international operations in 2008.
At the end of December 2008, 317 non-UK companies from 31 countries (defined by country of incorporation) listed on AIM, representing around 20.5 per cent of all companies listed.
Notably, non-UK companies on AIM are bigger than UK companies, with an average market capitalisation of 44.5 million pound compared with 19.1 million pound for UK registered companies, Grant Thornton said.
As per an analysis of non-UK firms by the country of incorporation about 595 AIM companies (38 per cent) are international and represent 55 per cent of the market-cap.
Some 34 companies have India and Bangladesh as their country of operation, and have a total market-cap of 1840.2 million pound and an average market cap of 54.1 million pound.
Saying that the year 2008, has been a challenging year for AIM, the report said "in December 2008 there were 1,550 companies with a combined market capitalisation of 37.7 billion pound on AIM, a reduction of 61 per cent from the previous year and the lowest since 2004."
The AIM market witnessed a significant fall in market capitalisation and the dip was more evident in the second part of 2008, as its market cap dropped 58.7 per cent over the second half of 2008, following the collapse of investment bank Lehman Brothers.
AIM's market cap also dropped following delistings across all major exchanges. Notably, 259 companies delisted from AIM in 2008, a 15.3 per cent drop from early 2008.
Around 58 non-UK companies (including 10 Australian, 9 American, 9 Israeli and 7 Canadian companies) cancelled their admissions to AIM during 2008.
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