London’s Alternative Investment Market (AIM) is attracting attention from clean energy companies and their advisors around the world as being the ideal market on which to undertake an initial public offering (IPO). But how are investors faring in this rush to raise financing?
New Energy Finance has taken a close look at all 78 fundraising transactions completed since 2001 by the 50 AIM-Quoted clean energy companies and funds, and found marked differences in performance between different groups of companies and deals (for a full list of companies and funds included, see Appendix I).
• The 50 AIM-quoted clean energy companies have a total market capitalisation of $7.8bn (£4.0bn).
• 2006 saw 17 IPOs and 14 secondary offerings, with a total of over $1.6bn raised – an increase of 67% on the total of $984.1m raised in 2005. Clean energy companies accounted for 5.9% of the total of $27.7bn (£14.2bn) raised on AIM in 2006.
• Anyone investing equally in each fundraising and holding on to their investment would be showing healthy annualised returns of 16.8% to the end of 2006. However, this top-line figure masks some very
different investment returns from different subgroups within the resulting portfolio.
• Investing in each of the 45 IPOs since 2001 and holding until the end of 2006 would have produced overall annualised returns of 23.5%. Investing in the 24 Secondary Offerings, however, would have yielded negative annualised returns of -0.5% before dealing
• AIM-quoted clean energy companies are pursuing a range of business models, from pure technology development, through equipment supply, biorefining, power generation and services. Companies involved in the service sector, in particular financial services, lead the returns for investors with 68.0% annualised.
• Exactly half of the 50 AIM-quoted clean energy companies are non-UK-based, but because of their size, they account for 63.4% by value. Non-UK-based companies have lagged in terms of returns, yielding just 13.5% compared to the 19.7% generated by UK-based
• Returns from clean energy-related fundraisings on AIM have varied widely depending on the year of investment. The class of deals dating from 2005 was the weakest in recent years, yielding aggregate annualised returns of just 6.7%.
• There has been a significant increase in the average deal size of fundraisings for clean energy companies on AIM, from $19.4m in 2004, to $44.4m in 2006, an increase of 129%.
• There is no obvious pattern among top-performing AIM-quoted clean energy companies, with a range of sectors, business models and companies represented. At the bottom of the table, a striking feature is how badly several renewable power generators have fared.
Please download the full report for more detailed analysis.