Junior stock market deals soar 155 per cent in a year, research finds

THE value of takeover and merger deals on London's junior stock market, AIM, has jumped nearly 155 per cent in the past year, according to new research.

Firms have been looking to capitalise on a buoyant UK tech sector, with M&A deals worth £8.4 billion in the 12 months to September, up from £3.3 billion on the same period last year, accountancy group UHY Hacker Young found.

Researchers said the hike in deal value was driven by private equity and international conglomerates snapping up AIM listed tech firms which had performed strongly through the pandemic.

The total value of tech M&A deals on AIM this year rose to £2.6 billion, making up nearly a third of the total value of all M&A deals on AIM.

Tech acquisitions on AIM accounted for just 7 per cent of deals (£232 million) in the previous year, researchers added.

The rise was led by the £919 million takeover of video game developer Sumo Group, creator of the video game series Little Big Planet and Sonic Racing, by Chinese technology conglomerate Tencent.

The acquisition of the Sheffield-based firm, which has offices in the US, has come under the scrutiny from a US national security panel last week.

However, Reuters reported that Sumo and Tencent are engaging with the Committee on Foreign Investment in the United States to get clearance for the deal before the end of the year.

The acquisition of business communications software provider IMImobile by American technology conglomerate CISCO was the second most valuable acquisition for an AIM listed technology firm at £540 million.

Dan Hutson, partner at UHY Hacker Young, said the AIM was putting the success of UK tech firms "in the shop window".

He said: "Being AIM listed is an excellent platform for growth companies, helping them to raise capital and to move to the next stage of their growth through M&A.

"Both private equity and major tech multinationals are watching AIM to identify acquisition targets."

Private equity interest in AIM listed firms has bolstered deal value across sectors in the past year.

London-based Ancala Partners' £341 million purchase of waste services business Augean and DBay Advisors' £240 million 75 per cent stake in Telit Communications, which provides Internet of Things software, topped the list of PE deals in the 12 months to September.

Deals in AIM listed health firms topped £835 million while mining deals came in at £305 million.