Initial public offerings (IPOs) on London’s junior market have ground almost to a halt in recent months as the threat of a Brexit cliff-edge draws ever closer.
While most businesses are understandably reluctant to nail their British or European colours to the mast, many have grown frustrated at the lack of clarity offered by Theresa May’s government despite the UK’s exit being only weeks away.
That uncertainty has filtered down to AIM, the home of almost 1,000 UK small-cap stocks, with only ten companies joining the market since July compared to 30 in the six months before.
Numbers from last month made for more grim reading when AIM companies squeezed £101.3mln out of investors, well below the long-term monthly average of around £300mln.
While Brexit is undoubtedly playing a part in the slowdown, many in the City are also pointing to economic and political issues around the globe.
The US and China, two of the world’s economic superpowers, are arguing with one another about trade tariffs, while the latter is starting to show signs of a slowdown after years of strong growth.
On top of that, Germany, Europe’s biggest economy, has just managed to avoid a recession.
All of this is weighing on sentiment during a time of year when many companies usually start to flirt with investors in anticipation of listing shortly after.
No surprises then the junior was subdued this week with the AIM All-Share up 0.7%, or 6 points, at 911. FTSE 100, by contrast, was up 2%, or 154 points, at 7,225.
Investors only had eyes for pharma firm Clinigen Group PLC (LON:CLIN) this Valentine’s week following a major deal with Swiss drug giant Novartis which sent its shares soaring 21%, or 155p, to 881p.
The deal, clocking in with a price tag of US$210mln, concerns the US rights for Proleukin, a drug used in the treatment of various cancers including melanoma and renal cell carcinoma, a type of kidney cancer.
Shares in miner Botswana Diamonds PLC (LON:BOD) also sparkled after it secured the right to mine at the Marange Diamond fields in Zimbabwe, sending shares up 17%, or 0.13p, to 0.8p in response.
Meanwhile, storage firm Lok’n Store Group PLC (LON:LOK) jumped 7%, or 31p, to 451p after strong first half trading with revenue in the six months to the end of January up 7.7%.
Shares in data intelligence firm GB Group PLC (LON:GBG) surged 11%, or 45p, higher to 470p after it raised £160mln in a placing to help fund its acquisition of identity verification group IDology.
Energy saving specialist Sabien Technology needed its own lifeline this week as shares plummeted 30%, or 0.03p, to 0.08p on the back of a profit warning. In its half year results the firm said it needed a “sustained improvement” in the conversion rate of its order book to be breakeven for the full year.
Project management group WYG also sounded the earnings alarm as a “cautious” business environment influenced by Brexit uncertainty dented the outlook for its UK business, sending shares down 56%, or 22p, to 17p.
Edenville Energy PLC (LON:EDL) shares were burned this week, tumbling 32%, or 0.03p, to 0.08p after its bid to develop coal power projects in Tanzania was rejected by the country’s government. Fellow bidder Kibo Energy also suffered from the news as its shares plunged 54%, or 0.9p, to 0.8p.
There was more bad news in the oilers with exploration firm Global Petroleum Limited (LON:GBP) slipping 23%, or 0.4p, to 1.2p as the Italian government voted for an 18 month ban on hydrocarbon exploration.
In the biotech’s, Motif Bio lost nearly three-quarters of its value, dropping 73%, or 30p, to 11p after the US Food & Drug Administration said it wouldn’t be giving regulatory approval for its antibiotic iclaprim.