AIM-listed tech firms see valuations jump in 2017
Tech companies listed on London's AIM see valuations increase 20 per cent in H1
Technology companies listed on the London Stock Exchange's Alternative Investment Market (AIM) saw their valuations increase by an average of over 20 per cent in the first half of the year, according to advisory firm Moore Stephens.
Research from Moore Stephens found that the average valuation of AIM-listed tech firms is now £88.9m, up 21.3 per cent since 31 December 2016 and up 51 per cent since the EU referendum.
Despite the growth in valuations, the market saw just one IPO (Ethernity Networks) in the first half of this year, down from eight across the same period in 2016 and seven in 2015.
Dougie Hunter, associate director at Moore Stephens, said private equity firms are choosing to cash in their assets' valuation through complete sales, rather than through IPOs.
"The lower number of IPOs can be explained by a combination of factors that of course includes Brexit and a general election, but also the fact that many private equity firms are choosing outright sales through secondary buyouts rather than exiting through IPO," he said.
"From our perspective, we are seeing an increasing pipeline as tech companies with IPO plans are waiting to see exactly what happens with the terms of Brexit. Our view is that as the landscape becomes clearer, there will be an increase in the number of tech companies that IPO in early 2018.
"The research shows not only the resilience of tech companies on the AIM market - outperforming the major UK share indices - but also that investors are expecting tech companies on AIM, the majority UK-based, to grow as a result of earning opportunities from the weaker pound rather than just benefiting from reporting international earnings."
AIM-listed companies include the likes of distributor Northamber, MSP Redcentric, and security vendor Osirium.
Moore Stephens found that £275m was raised in secondary fundraising in H1, eclipsing the £224m raised in the whole of 2016.