The Alternative Investment Market (AIM) all-share index recorded an impressive 21% rise in 2020, in stark contrast to the FTSE 100 index which fell by 14%, its biggest decline since 2008.
The AIM all-share index closed at 1,157.04 on 31 December 2020, a 21% rise versus the closing price of 958.26 on 31 December 2019. The index sunk to a low of 589.63 on 18 March 2020, just prior to the first UK national lockdown. However, by October the index had already recovered to pre-COVID levels and continued to build through the close of the year.
While there were just three IPOs on AIM in the first half of 2020, there was a rebound in the second half with 13 IPOs, a significant uplift on the 10 IPOs recorded in calendar year 2019.
Alternative energy did well in 2020 with a handful of companies amongst the top 20 performers in terms of share price*. However, more than half of the top 20 share price increases in the year came from companies in either precious metals and mining or, most notably, healthcare (including pharma and medical equipment) sectors. Among the top performers were pharma groups Novacyt SA (up 6523%) and Synairgen plc (up 2504%) as well as sustainable energy solutions provider EQTEC PLC (up 2152%).
The latest figures for 2020 show that money raised from further issues saw a 57% increase compared to 2019. In total, AIM companies raised almost £5.3bn in new money in 2020, providing many with much-needed liquidity. Healthcare (including pharma) businesses accounted for just over £1.2bn of new money raised, while consumer discretionary companies raised £1.1bn and tech businesses £568m.
In 2020, the total number of trades on AIM topped 17 million, 69% above the 2019 figure, and the highest level since AIM launched over 25 years ago. However, the average individual trade value hit its lowest level on record. While average daily values of trading increased this year with the higher number of trades each day, average individual trade values declined suggesting that retail investors became more active on AIM during the year.
Commenting on the performance of the junior market, Scott Knight, Head of Audit at BDO, the number one auditor of AIM-listed companies said:
“The junior market performed surprisingly well in 2020, offering significant returns to retail and institutional investors.
“In the early stages of the pandemic, many AIM companies sought to raise funds to prepare themselves for the storm ahead. The shock also put the brakes on IPOs, particularly in the second quarter. However, the increase in IPOs in the second half of the year points to a pent-up demand for high quality growth companies that can create value in an economic environment that looks very different to a year ago.
“As we enter 2021, we are likely to see a shift away from balance sheet repair towards fundraising for growth capital, particularly in those sectors such as tech and pharma which will emerge stronger from the crisis.”