An extract from Northland Capital's AIM Journal
Companies: APH, AGP, BMK, TSM
A rise in the number of potential AIM new entrants this month has been pointed out in the press but this is not unusual for December and does not necessarily imply a general upturn.
At least seven companies are already set to join AIM this month and it might become one of the most active months this year for new admissions. December can tend to be an active month, though, as companies seek to complete their flotation ahead of the end of the year.
In the seven years from 2009, following the global economic slump, December has had the most flotations in a single month in three of those years and raised the most money in a month in two of them. In 2009, seven of the 36 new entrants were in December and they raised one- fifth of the new money.
The worst year was 2011 when there were three new admissions in December compared with 90 for the year. Every other year, between 10% and 15% of new admissions were in December.
In 2015, £318.4m of the £1.16bn raised by new entrants was generated in December
Last year, £318.4m of the £1.16bn raised by AIM admissions was generated in December – although it was mainly attributable to large acquisitions by two existing AIM companies, Alliance Pharma and Benchmark. That was not a prelude to a strong new-issues market in 2016. January and February tend to be quiet months, with March normally one of the most eventful months for new entrants but there were a relatively modest nine this year, raising £137.9m – and that included three readmissions.
There were seven new entrants in June, including one readmission, and 13 in May, including three readmissions, with lower numbers in each of the other months. Around one-third of the £1.06bn raised by new admissions so far this year was raised in May and June.
Putting Asian Growth Properties Ltd to one side because it is being reintroduced following a change in domicile from the British Virgin Islands to Bermuda, there are seven companies that say that they are likely to join AIM this December. ThinkSmart, which provides digital, paperless and retail point of sale finance services via its SmartCheck technology, has already switched from ASX to AIM via an introduction on 2 December, leaving six more to come.
December is not only set to be one of the most active months in terms of number of new entrants, it could also be a strong month for money raised.
Diversified Gas & Oil currently has debentures quoted on ISDX but the US-focused oil and gas producer is set to raise $60m from an ordinary share issue on AIM. Diversified generated revenues of $13.6m in the nine months to September 2016 and it continues to buy oil and gas production assets.
Oxford BioDynamics has raised £20m – with the company getting £7.1m and the rest going to existing shareholders – and this values the biomarkers developer at £136m. Oxford BioDynamics has developed and is generating revenues from, epigenetic biomarkers for use by pharma and biotech companies. Biomarkers are a rapidly growing market, particularly for use in personalised medicine. The company’s EpiSwitch platform can help pharma companies to develop new drugs more efficiently.
Surgical endoscopy products developer Creo Medical Group is raising £20m to further develop its electrosurgical energy generation and control technology. Creo wants to launch a range of medical instruments for gastrointestinal therapeutic endoscopy before moving into other markets. Regulatory approval is expected in Europe next year and in the US the following year.
ECSC is a cyber-security business that assesses risk, identifies potential problems and implements technology for its customers. Bradford-based ECSC was formed in 2000 and wants to raise £5m of new money. That would value the company at £15m.
Video analytics technology provider Big Sofa is not a new name to AIM because it was originally going to reverse into former AIM company New World Oil and Gas but that deal fell through because of concerns about the shell. Instead, Big Sofa is reversing into another Adam Reynolds controlled shell, HubCo Investments, which had previously been quoted on ISDX but failed to secure a deal in sufficient time to retain that quote. HubCo has never had another business so there are no legacy issues. Big Sofa Technologies, as it will be renamed, is raising £6.1m at 17p a share, valuing the enlarged share capital at £9.5m.
Mongolia-focused property investor and cement manufacturer Asia Pacific Investment Partners is covered on page 1. There is no guarantee that all these companies will float. However, there could be additional flotations this month. Just do not assume that this increased level of interest from new admissions will continue.