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Private finance accelerating away from public markets

With private equity booming, our sharp-shooting columnist Jon Moulton fears that there’s not enough skin in the game

Corporate Financier article imageThe world of private finance is fast accelerating away from the public markets. Fewer and fewer companies are publicly listed. For example, I find the AIM statistics quite alarming – the number of companies on AIM peaked at 1,694 in 2007 but had dropped to 863 by the end of December 2019. In 2005, there were 519 new issues, in stark contrast to just 23 last year, with only £489m raised between them. The viability of AIM is a concern. It’s a shame, because London’s junior market has some very good points.

Perhaps it’s no coincidence that, over the same period, private equity has exploded – this is an ‘industry’ measured in the trillions of dollars. But it’s neither immune to the inevitable effects of having to do more marginal deals as competition heats up, nor to the effects of low interest rates that have pushed private equity investors into accepting lower returns than historically achieved.