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The performance of the AIM and Main Market indices
Key drivers of transactional activity, including new and further issues by sector across the exchanges
Noteworthy fundraises and market dynamics
The most active advisers
Recent technical updates and guidance.
About UK Capital Markets Insights
Our quarterly UK Capital Markets Insights publication tracks the performance of the AIM and FTSE markets of the London Stock Exchange. Produced by our capital market team it examines market data to identify key trends and includes our outlook for the coming months, covering:
+44 (0)20 7893 2058
chris.searle@bdo.co.uk
CHRIS SEARLE
Corporate Finance Partner
Transaction Services
+44 (0)20 7893 2678
ian.cooper@bdo.co.uk
IAN COOPER
Corporate Finance Partner
Transaction Services
contact us:
£800m
UK Capital Markets Insights
Review of AIM and Main Markets
After AIM and the Main Market were buoyant in the first half of 2021, performance in Q3-21 was mixed.
While AIM had the highest new admission fundraising since the same period in 2017, with new admission fundraising on AIM higher than the Main Market, further issues were the lowest they had been all year. The recovery in the AIM indices reversed in the same period, weighed by inflationary concerns.
Similarly, outside of one large transaction, activity on the Main Market slowed in Q3-21. Fundraising was at its lowest quarterly level since Q1-20. Real estate and financial services (funds) drove the majority of transaction numbers, as investors increasingly prioritised investments with yield-based returns.
The UK capital markets remain extremely active, and we are seeing significant deal flow for both IPOs and further issues. However - as we predicted over the summer - with so many issuers coming to market at the same time, it was inevitable that there would be some indigestion amongst investors. This most likely points to investors being more selective with investments this side of Christmas, with some transactions slipping into the new year.
The BDO UK Capital Markets Insights report analyses the activity of the AIM and Main Market of the London Stock Exchange on a quarterly basis. Transaction activity reviewed includes IPOs, fundraises, sector trends and significant deals.
Our Capital Markets team digests Q3-21 further below. To discuss how to prepare for a listing or to obtain an IPO readiness report, contact us.
Before taking a closer look at the report, we would like to offer huge congratulations to this year’s AIM Awards winners, which were announced at the annual AIM Awards held on 14 October 2021.
Overview
£0.8bn was raised in new admissions on AIM in Q3-21; higher than the Main Market (£0.7bn) and the highest quarterly total since Q3-17
AIM and FTSE indices stalled in Q3-21 with the FTSE All Share and AIM All Share as at 31 October ending 2% and 3% lower respectively, compared with June 2021
On AIM, most funds were raised on healthcare & pharma sector transactions (£0.4bn)
Q3-21 Main Market was at its lowest level (£5.1bn) since Q1-20 - with holidays a key factor - but still higher than pre-pandemic levels
Key facts and figures: Q3-21 in review
Raises most funds on AIM
Healthcare & pharma
AIM and FTSE indices
2% and 3% lower
in new AIM admissions
fundraising lowest since Q1-20
Main Market
New Main Market admissions
£700m
Funds raised on the Main Market reduced from £6.4bn in Q2-21 to £5.1bn in Q3-21. The reduction meant funds raised in the quarter were the lowest since Q1-20; albeit the amounts raised remained above pre-pandemic levels (quarterly average in 2019: £4.3bn)
The reduction in funds raised was driven by both a reduction in the average value of fundraising, and the number of transactions (both of which were lower than Q1-21 and Q2-21). This was largely due to the market pausing for holidays, with transaction numbers in August and September at the lowest levels since January 2021
The FTSE All Share index continued its slow growth, with the indices largely flat in the quarter (FTSE All Share up 1.45ppts from June to September). Market growth was impacted by inflationary concerns, with the continued strength of the pound versus the dollar suppressing international earnings in the period
£0.7bn was raised on new admissions in Q3-21. While transaction numbers remained high, the average value of new admissions was significantly lower (average value: £55m, versus £175m in the year to June 2021). While there were a number of larger companies coming to market (eg Wise Plc), these companies raised relatively small amounts on admission (compared to their market capitalisation)
Further issues remained relatively strong in the quarter, albeit in line with Q2-21, totalling £4.3bn (Q2-21: £4.5bn). Fundraising was largely driven by one significant transaction by EasyJet (£1.2bn) as the Group raised funds to support the slower than anticipated recovery from the pandemic. Aside from EasyJet there were a number of other large fundraises, largely in the real estate sector (which continued into October 2021) as REITs have seen a significant resurgence backed by improving real estate valuations and investors looking for more secure, dividend yielding investments
The three largest sectors in Q3-21 were financial services (funds) (£1.6bn), leisure & hospitality (£1.3bn) and real estate (£1.0bn). Financial services (funds) growth was mainly driven by the number of transactions in this space, with 103 transactions in Q3-21 (out of 233 total transactions). Leisure & hospitality was driven by a single large transaction (EasyJet).
Main Market: Q3-21 insights
After consistent growth since the pandemic, the AIM All-Share index ended the quarter flat versus June 2021. The index has since fallen further, ending October 3% down on Q3-21. As the smaller, more domestic-focused market, AIM has been relatively more affected by concerns around UK inflation and general supply shortages in the run-up to Christmas
AIM Q2-21 insights
AIM remains a key destination for new issuers. There were 26 new admissions on AIM in Q3-21, raising £780m, with AIM seeing the highest number of new admissions and the highest fundraising proceeds for three years, raising more than the Main Market for the first time in over three years
Similarly to the previous quarter, a number of reverse takeovers (two, including Longboat Energy plc and Access Intelligence Limited) and transfers from the Main Market (two) increased the new admission numbers, although the majority of new issues were IPOs (20) across a range of sectors
Revolution Beauty (where BDO acted as reporting accountant) was the largest fundraising on IPO (£111m), and the largest new admission fundraise in 2021 to date. The fundraise sought to allow the existing PE investor to realise their investment and to allow the company to raise funds for future growth
Further issue fundraising of £0.9bn in Q3-21 was well below previous quarters (Q1-21: £1.5bn, Q2-21: £2.0bn) and the lowest since Q3-20. This was underpinned by a reduction in the number of further issue transactions which raised funds which, at 74, was the lowest for over five years. Average transaction values remained high at £13.4m (compared to an average of £8.9m in 2020 and £6.4m in 2019)
Healthcare & pharma continued to be the highest grossing sector on AIM in Q3-21 (£0.3bn raised), continuing its strong performance since the pandemic (funds raised in this sector since Q1-20 were more than double any other sector at £2.6bn).
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UK CAPITAL MARKETS INSIGHTS
Q1-20
Financial services (funds) and real estate accounted for £2.6bn (51%) of funds raised on the Main Market, as investors flocked to dividend-yielding stocks.
Main market
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Q3-21
Total transaction numbers were in line with the same period last year (255 in Q2-21, compared to 245 in Q2-20) and the previous quarter (253 in Q1-21). This reflected a trend of higher transaction numbers on the Main Market since the pandemic (average quarterly transactions of 230 since Q1-20, compared to 151 across the four years prior to Q1-20).
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AIM
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The performance of the AIM and Main Market indices
Key drivers of transactional activity, including new and further issues by sector across the exchanges
Noteworthy fundraises and market dynamics
The most active advisers
Recent technical updates and guidance.
Our quarterly UK Capital Markets Insights publication tracks the performance of the AIM and FTSE markets of the London Stock Exchange. Produced by our capital market team it examines market data to identify key trends and includes our outlook for the coming months, covering:
About UK Capital Markets Insights
+44 (0)20 7893 2058
chris.searle@bdo.co.uk
CHRIS SEARLE
Corporate Finance Partner
Transaction Services
+44 (0)20 7893 2678
ian.cooper@bdo.co.uk
IAN COOPER
Corporate Finance Partner
Transaction Services
contact us:
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51% of Main Market funds raised
Financial services
(funds) & real estate
Some seasonality in the markets in this period is typical, and the reduction in this period compared to Q2 is in line with the reduction in the prior year and 2019. However, fundraising in Q3-21 (£5.1bn) was lower than the same period in the prior year (£7.2bn in Q3-20) largely due to two large IPOs in the prior year (together raising £2.4bn). This was not repeated in 2021.