AIM practices suffer as stock market gets case of the jitters

Recent market uncertainty means law firms are likely to suffer a dip in their previously booming alternative investment market (AIM) practices.

Lawyers have warned that they are already seeing a downturn in instructions as nervousness in the stock market forces companies to postpone or axe their flotation or share sale plans.

Several companies have already deferred flotation plans, including pub beer-flow monitoring equipment company Brulines, which was due to list later this month and had hoped to raise £15m via a placing.

DLA Piper Rudnick Gray Cary corporate partner Alex Tamlyn said further transactions could well be pulled, but added that the trend was unlikely to be the “prelude to a crash, but more likely just a short to medium-term dip”.

Field Fisher Waterhouse (FFW) partner Anthony Brockbank agreed that many deals previously planned for June and July were being deferred and were likely to be rescheduled for September, after the summer break.

Norton Rose partner Iain Wright said: “The first few months of the year saw an unprecedented number of IPOs and so the market is just taking a breath.”

The warnings come after research conducted by the Hemscott Group revealed that Eversheds remains the leader of the AIM legal advisers. The firm, which topped the adviser rankings for the second quarter, acts for 48 AIM clients, including Advent Capital, Oasis Healthcare and Spice Holdings.

DLA Piper and Pinsent Masons have meanwhile swapped positions in the client number rankings since the first quarter, advising 47 clients with a market capitalisation of £1.89bn and 46 clients with a market capitalisation of £2.55bn in the second quarter respectively.

But the chasing group of firms are the ones to watch. FFW was up to sixth place with five extra clients; Berwin Leighton Paisner (BLP) also gained ground with six more clients. Memery Crystal gained four.

The rankings based on market capitalisation are, however, quite different. Ashurst remains out in front with 21 clients with a market capitalisation of £4.48bn. BLP and Norton Rose are keeping pace, with £3.88bn and £3.68bn respectively.

But SJ Berwin and Salans were the biggest risers. SJ Berwin, which entered the client rankings for the first time with 20 clients and reported market capitalisation of £2.32bn, was up six places to eighth. Salans also rose six places to ninth, with market capitalisation of £2.02bn.

Norton Rose’s Wright said that much of the recent interest was driven by international companies, in particular from the US, because of the Nasdaq’s tighter regulatory regime. Foreign companies now account for nearly 17 per cent of the total number of AIM companies, and last year formed 23 per cent, or 120 companies, of all new admissions. This was more than the total in the past five years.

Tamlyn said the emerging Russian, Central and Eastern Europe and Asian markets were driving growth, as were the renewable energy, natural resources and property sectors.

David Collins, head of corporate finance at BLP, said: “It’s not that we aren’t now seeing anything coming through, it’s just become more difficult because of the drop in the markets in general.”

Market capitalisation of AIM clients
1 (1)* Ashurst 4.48 (3.62)*
2 (2) Berwin Leighton Paisner 3.88 (3.30)
3 (3) Norton Rose 3.68 (2.68)
4 – McCarthy Tétrault 2.83 –
5 (4) Olswang 2.78 (2.30)
Top 20 law firms by number of AIM clients
1 (1)* Eversheds 48 (48)*
2 (3) DLA Piper 47 (43)
3 (2) Pinsent Masons 46 (47)
4 (4) Norton Rose 43 (42)
5 (5) Halliwells 42 (40)
6 (6) Field Fisher Waterhouse 41 (36)
7 (7) Berwin Leighton Paisner 40 (34)
8 (7) Memery Crystal 38 (34)
9 (9) Lawrence Graham 31 (28)
10 (10) Osborne Clarke 28 (26)
11= (11) Stringer Saul 26 (25)
11= (11) Taylor Wessing 26 (25)
13= (11) Charles Russell 23 (25)
13= (15) DMH Stallard 23 (23)
13= (18) Nabarro Nathanson 23 (19)
16 (16) Hammonds 22 (22)
17= (14) Ashurst 21 (24)
17= (16) Burges Salmon 21 (22)
19= – Kirkpatrick 20 –
19= – SJ Berwin 20 –