The UK Initial Public Offering (IPO) market continued to stagnate during the third quarter 2005, while the Alternative Investment Market (AIM) boasted rapid expansion, KPMG figures have claimed.
Just two companies joined the official IPO list during the third quarter, continuing a slow growth trend highlighted by KPMG earlier this year (CRN, 4 July), which saw the UK IPO’s total value decrease by 58 per cent from £1.37bn to £569m.
Conversely, the UK AIM market saw 249 new entrants enter the market during this year’s first three quarters, raising a total of £2,886m.
However, David Simpson, partner at KPMG corporate finance, said the figures should be viewed with caution.
“The third quarter often incurs a slowdown because it includes the summer months,” he said.
KPMG’s report also highlighted that, despite the high number of new AIM entrants this year, the majority of companies joining in 2005 raised relatively low levels of money.
Fourteen of the 65 new entrants joining the AIM during the third quarter this year raised over £20m each, with the remainder generating an average of £5m each.
Simpson added that AIM was proving increasingly popular with SMEs.
“AIM is the listing of choice for SMEs because it has a number of tax advantages. However, IPO is still popular with larger companies,” he said.
Alistair Edwards, senior analyst at Canalys, said: “European IT companies are looking to regain control of their business by buying back their shares.”
Last month, Computacenter announced a possible share buy-back after revealing a 73 per cent fall in profit for its first six months, which it attributed to “subdued trading over the summer” (CRN, 20 September). The firm was unavailable for comment.
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