With three admissions under its belt so far in 2011, Saffery Champness Corporate Finance has been involved with businesses ranging from the usual energy companies to the rarer farming listings.
Niraj Patel, director at Saffery Champness, says that while AIM activity is clearly not yet back up to historic levels, there has been work with higher-quality businesses.
Examining the outlook, Patel adds: ‘For the right company there has been a change in sentiment towards a willingness to start taking some risks.
‘However, given what has happened recently with the sovereign debt crisis in Europe, there is still a great deal of uncertainty as to what the future has in store.’
Saffery Champness acted as the reporting accountant on the April listing of pharmaceutical technology firm Microsaic Systems in a deal that raised £4 million.
Despite the risks associated with bringing any new technology to the market, there were a number of factors that seemed to give investors confidence, says Patel.
‘A level of assurance was generated by product development being carried out in partnership with leading pharmaceuticals businesses. With the technology being patented and having the potential for a wide range of applications, there are also opportunities for the company to diversify sales into a number of different markets.’
Patel was also part of the team that saw Continental Farmers Group list on AIM, with the Eastern Europe-focused farming business raising £14.8 million in June.
Despite the inherently risky nature of a farming business, with weather largely dictating crop yields from one year to the next, Patel says that the strategy of the company and its existing set-up in Ukraine meant that it was an interesting investment option.
For there to be a significant uptick in market activity, Patel remains firm that more confidence is required. ‘The markets will be keeping a close eye on economic data on various fronts, such as gross domestic product, unemployment and various other indices relating to retail and manufacture.
‘Risk appetite is still relatively low and it will probably be a year to 18 months before we see any significant increase in confidence.’
For businesses on the growth markets looking to raise finance through secondary fundraisings, it is the case of a sound story again for Patel, who says that companies looking to seek working capital following a dip in trade will find the going tough.
As Patel explains, ‘The working capital story may well be legitimate but investors are unlikely to have much appetite to fund historic losses without there being a tangible growth angle.’
He adds: ‘Recent secondary fundraisings have mostly been in the energy sector, and that is likely to be the case for the next 12 months.’
Looking at the way forward, Patel sees energy and exploration as the sector that will continue to lead the way, with its innate risky nature not being affected by market turmoil.
Growth markets are still a beneficial place to be, says Patel, with acquisitions presenting businesses with the quickest way to achieving growth. Where the acquisition fits well with a company’s overall growth strategy, there are enough attractive distressed targets out there to keep parties interested, he adds.