The latest Hemscott rankings for legal advisers on AIM see Pinsent Masons retaining a slender advantage in terms of total client numbers, with LG boasting a healthy lead in terms of market capitalisation.
LG is also leading the way with most clients among the top 100 AIM companies, increasing the number from eight in April to 11 at the end of the first quarter of this financial year.
The continuing struggles of AIM show how difficult it is for the firms trying to grab a piece of the junior market action, but compared with 12 months ago there are renewed signs of life.
With delistings still more common than new listings, no firm can still lay claim to a half-century of clients for the first time since publication of the quarterly rankings began three years ago. Pinsents now lists 48 clients, one clear of LG, while Memery Crystal – one of the few firms to have added clients since the last quarter – has moved into third place with 41.
But despite falling client numbers, there is a feeling among advisers that the market has bottomed out while simultaneously the quality of companies trading on it has begun to improve.
The total market capitalisation of clients for the leading AIM firms reflects this theory. LG’s share, while down on the final quarter of 2009-10, has leapt from £3.3bn to £4.6bn over the past 12 months, despite listing seven fewer clients.
LG corporate partner Tom Nicholls says those firms with traditionally strong AIM books have repositioned themselves over recent months.
“The general trend is that those [companies] that can go for the main market will go for it,” says Nicholls. “So a lot of firms are shifting up in terms of the size of client they’re targeting.”
Earlier this summer LG client KSK, the Indian power supplier, moved from AIM to the main listing. But a conference for nominated advisers hosted by the firm in June revealed that new listings might have started to see the light of day.
Nicholls confirms that LG is working on three IPOs scheduled to launch in the next three months.
“A year ago there were only one or two [IPOs coming through]; it’s more positive now, but I wouldn’t get overexcited yet as it’s coming from a very low position and building gradually,” he says.
A tighter market has meant that those firms most associated with AIM work are again winning the lion’s share of quality mandates, reflected by Memery Crystal’s performance.
“We’re seeing opportunities for picking up more AIM clients,” confirms corporate partner Nick Davis. “There was a rush of other firms into the market when there was more than enough work to go around in the past, but now that’s changed.”
In the market capitalisation rankings, the biggest mover over the past three months has been Travers Smith, which achieved second place behind LG, largely on the back of the new listing for London Mining.
Travers corporate partner Andrew Gillen agrees that the junior market has begun sacrificing quantity for quality, suggesting that the trend for delisting will not hurt the serious players.
“The delistings are largely micro-cap companies, of which there were a large number on AIM,” he explains. “What you’ll see is the stronger AIM companies staying, which should add to the improved fortunes of the market. There’ll be fewer companies, but the quality will be higher.”
Most firms might have seen their number of AIM-listed clients fall over the past three months – a trend that is mirrored when looking at the year-on-year figures – but the numbers do not tell the full story.
With the quality of work available seemingly on the up, the market is set to return leaner but healthier.
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