Last month the Alternative Investment Market (“AIM”) celebrated 20 years since its launch. We take a look at the market’s history, evolution and appeal as it reaches this significant milestone.
Evolution of AIM
When it first opened for trading on 19 June 1995, it was home to just 10 companies that were worth a combined total of £82.2m. Today, there are 1,074 companies trading on AIM, of which 864 are British, with a combined market capital of £75.3 billion. Recent research has highlighted that AIM has created 731,000 UK jobs, and contributes around £25 billion per annum to the UK economy.
AIM has evolved as a market focussed on small and medium-sized companies, with companies ranging over 40 different sectors. It has become a gauge of which sectors are thriving in the UK market, with tech, healthcare and clothing companies currently enjoying particular success. Amongst AIM’s roster of well-known companies are ASOS, Emis and Boeing, all of which have proved to be enduring success stories both for the companies and their investors.
The enduring appeal of AIM
The market provides companies with a level of prestige and a prominent platform to reach new investors. Companies are often attracted by its less onerous regulatory requirements compared with the Main Market. Unlike the Main Market, a company does not need a minimum length of trading history to list on AIM, none of the shares need previously to have been in public hands and there is no minimum market capitalisation requirement.
In addition to the more flexible regulatory requirements, there are also a number of tax incentives for investors associated with shares traded on AIM. The Finance Act 2014 abolished stamp duty on any shares that are traded on AIM. Many of the companies currently listed on AIM also benefit from business property relief for inheritance tax purposes, meaning that the value of the shares could be 100 per cent. exempt from inheritance tax, though this rule only sets in after the relevant shares have been held for two years. AIM shares can also be held in ISAs, attracting income tax benefits.
While it is inevitably difficult to predict the future of any stock market, the combined market capital of the companies listed on AIM has continued to grow year on year since its inception in 1995. While some critics have described the market as being “like a casino”, the lower regulatory requirements and tax reliefs that AIM offers is likely to continue to attract new companies and investors to the market.
In the last 20 years, the Alternative Investment Market has enjoyed significant growth and success and continues to be a key component of the UK’s financial prowess. With market cap and listing numbers consistently increasing, there is every hope that the celebrations will continue over the next 20 years.
Rosenblatt advises issuers, investors, sponsors, nominated advisers and brokers on a variety of AIM transactions, including pre-listing fundraisings, listings and primary/secondary equity offerings. We also advise on regulatory obligations and public-to-private transactions.
Our experienced corporate team has recently advised finnCap on the £9.6 million placing and listing on AIM of Constellation Healthcare Technologies, Inc; Rosslyn Data Technologies plc on its £10 million placing and admission to AIM; and N+1 Singer on (i) the £11 million placing and admission to AIM of Applied Graphene Materials plc; (ii) the $20 million (£11.9 million) placing and $2 million (£1.2 million) open offer by blur Group plc; and (iii) a £16 million placing for Actual Experience plc.
