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Chris Boxall, of Fundamental, said despite the disappointing figures, investors have made decent returns from some risky companies.
He said: “It’s noticeable that all the top performers are early-stage companies which are not yet revenue generating and come from either the resources or life sciences sectors.
“We are generally reluctant investors at IPO and like to see companies deliver on public markets before investing,” he added. “Many companies list after enjoying a strong period of growth and this has often proved tough to sustain. We are also very wary of big insider selling at IPO, notably by founders, which we have seen on several occasions in 2021.”
The largest winner of 2021 was Big Technologies, which makes remote monitoring devices used in healthcare and policing. Shares are up 40pc since listing in July, although they had risen much higher before falling back. Year-to-date, the best performer has been 4basebio UK Societas, a life sciences business, with the share price quintupling since IPO in February.
Cornish Metals, a copper and tin miner, has seen its share price more than triple, although the firm was listed in Canada prior to its entry in the UK market. The big loser was Victorian Plumbing Group, which joined Aim in June in what Mr Boxall called a “blaze of glory”. However, the business only raised £11.8m for itself with the rest going to shareholders selling down, including founder and chief executive Mark Radcliffe and his brother Neil Radcliffe.
The pair took out more than £260m with the business valued at more than £800m at IPO. The shares currently sit some 60pc below list price. This, as Mr Boxall pointed out, is what investors need to look for when meddling with newly listed companies. Taking money from new investors, while just rewards for entrepreneurs, does not mean gains for newcomers.
It is difficult to know, at an IPO, which companies are set for growth and which are not. With limited data available to DIY investors, particularly on Aim, it’s not an area Questor feels the risk and reward balance pays off. Considering IHT investors only had a 50pc chance of getting it right this year, our stance on IPOs remains unperturbed. One should never waver from the rules of engagement, and while there have been successes this year, the difficulty in sorting the wheat from the chaff is enough to sacrifice profits in the name of certainty.
Read the latest Questor column on telegraph.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 5am.
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