New listings on Britain's Alternative Investment Market all but dried up in the first quarter as the commodity price rout deterred mining and oil companies, which traditionally seek financing there. According to AIM-focused accountancy firm UHY Hacker Young, around 84.9 million pounds ($125 million) was raised via new listings on AIM in the first quarter of the year, down 93 percent year on year and 87 percent quarter on quarter.
Ten companies listed their shares on AIM in the first quarter, down from 27 the previous quarter and 18 a year earlier. Only one energy or resources firm, Ironridge Resources , carried out an Initial Public Offering (IPO) on AIM in the quarter, down from two a year earlier and an average of three to four each quarter since 2013.
Several companies in those two sectors delisted, including African Eagle Resources, Beacon Hill Resources, Leyshon Energy, Mercer Resources and Frontier Mining. Brent crude and nickel prices hit six year-lows during the first quarter, while an iron ore benchmark headed towards the lowest level since the Steel Index began compiling prices in late 2008.
"The fall in oil and other commodity prices has heavily impacted the financial positions of many companies, forcing some small exploration companies with high risk portfolios to delist," Laurence Sacker, corporate finance partner at UHY Hacker Young, said. "Similarly, companies that had been looking to list on AIM have chosen to postpone their plans because investors are wary of the financial pressures falling prices are putting on the sector."
The FTSE AIM index fell 6.4 percent in the first quarter, weighed down by a 18 percent fall in the oil & gas sector index. Even after the slump, oil & gas exploration and production remains the sector with the highest weighting in the FTSE AIM, although biotechnology and medical research is a close second, Thomson Reuters data showed. In total, 27 companies delisted from AIM in the first quarter of the year from 19 in the previous quarter, leaving the market with 17 fewer companies by the end of the quarter, the biggest shrinkage since the first quarter of 2012. Last year, the value of initial public offerings on AIM hit its highest since 2007 at 2.4 billion pounds ($3.7 billion), twice the sum raised in 2013, according to UHY data.
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