AIM IPO fees down as nomads compete for work

Competition amongst nominated advisers is driving down the cost of listing on the alternative investment market.

The cost for businesses to list on London’s junior stock exchange (AIM) has dropped for the first time in seven years, accountancy firm UHY Hacker Young says.

Research conducted by UHY Hacker Young shows that the cost of listing on AIM is down to 8.4 per cent of all funds raised last year, from 10.6 per cent the previous year.

Competition between nominated advisers (nomads) and financial advisers is attributed as the prevailing reason for the drop in rates being charged.

The firm also says that the increases in the average money raised by new AIM listings has also helped reduce the cost of listing as a proportion of money raised.

Statistics reveal that the total amount of money raised from new listings on the junior exchange climbed by 26 per cent to £676 million in 2012.

Laurence Sacker, partner at UHY Hacker Young, comments, ‘Corporate finance advisers are feeling the pressure after several years of low levels of IPO work.

‘They are willing to be flexible over pricing in order to bring in the work needed to keep their teams ticking over.’

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Another development noted by UHY Hacker Young is the emergence of smaller corporate finance boutiques which will focus on aspects of AIM due diligence work at ‘smaller margins’.

The average amount raised per AIM listing increased in 2012 by 37 per cent to £15.7 million, with 43 firms joining. One fewer businesses raised less than £1 million during an IPO process.

Sacker adds, ‘Nomads are operating in an increasingly international market.

‘They know that businesses will not go ahead with AIM IPO plans if they consider the overall cost of listing on AIM, including the advisory fees they pay, to be excessive and feel they can get a better deal in another financial centre.’

Alan Dobie

Alan Dobie

Alan Dobie was assistant editor at Vitesse Media Plc before moving on to a content producer role at Reed Business Information. He has over 17 years of experience in the publishing industry and has held...