New research from Moore Stephens, the Top Ten accounting and advisory firm, has revealed that the average enterprise value of technology companies on the Alternative Investment Market (AIM) has reached £88.9m – a 21.3% increase from 31 December 2016 and a 51% increase since the Brexit decision.
Moore Stephens’ ‘Tech AIM Barometer’ revealed there was only one tech IPO on AIM over the six month period to 30 June 2017 – Ethernity Networks – down from eight in 2016 and seven the year before. Moore Stephens believes was due to a combination of factors, including the political and economic uncertainty caused by Brexit negotiations and, to a lesser extent, the recent General Election.
Commenting on the research, Dougie Hunter, Associate Director at Moore Stephens, said: “The fewer number of IPOs can be explained by a combination of factors that of course includes Brexit and a General Election, but also the fact that many private equity firms are choosing outright sales through secondary buyouts rather than exiting through IPO.”
Despite the lack of tech IPOs on AIM, Moore Stephens’ Tech AIM Barometer has revealed that more than £275m was raised from secondary fundraising in the six month period – a higher figure than for the whole of 2016 (£224m) – and included the three largest individual company fundraises since 2015 (GBG, Learning Technologies Group and Telit).
By way of a sector-analysis, the dramatic growth shown in the past six months has been driven by:
- hardware companies – increasing by 35%;
- support services – increasing by 21%;
- software by 20%.
By comparison, the FTSE AIM All-share index increased by 14% and the FTSE All-share index by just 3%.
Although the majority (over 90%) of the businesses analysed are based here in the UK, the Ethernity Networks IPO was in fact the first overseas tech IPO on AIM since 2015. This, coupled with the high secondary fundraising levels, illustrates the fact that international investors view UK tech on AIM as value for money due to not only a favourable forex environment, but also the recent strong track-record.
