Tax changes help North East companies AIM high

Since the launch of the Alternative Investment Market (AIM) in 1992, 30 companies from the North East have successfully floated on the junior market.

The first one was Lady in Leisure in 1997, with the following ten years seeing a steady flow of companies floating in the region. Many of the North East companies which originally floated on AIM are still trading today including Hargreaves Services, Northern Bear and Zytronic which has been listed since 2000.

There have also been a number of companies transferring to AIM from the main market such as Stadium Group, Applied Optical Technologies (now Opsec Security Group) and Chieftain. 

Ten years after the first North East admission, the total number of companies listed on AIM reached its peak of 1,694. But with the onset of the financial crisis, it wasn’t until 2012 that the next North East company, Utilitywise, was admitted to AIM.

The North East currently has eleven companies listed. The largest is Vertu Motors which floated in 2006. In less than ten years the company has achieved a market share of just under £200 million which easily places it in the top 100 AIM companies. With a turnover of more than £1.2 billion the company has also consistently featured in the top ten companies in the North East Top 200 listing for several years.

In recognition for his efforts and drive to move Vertu Motors up the ranks of British automotive retailers Robert Forrester, CEO of Vertu, won the PwC sponsored ‘Entrepreneur of the Year’ award at the 18th annual AIM awards dinner in London last year. 

Since it was founded, Vertu has pursued a strategy of acquisitive growth and consolidation of UK motor businesses. The most significant recent addition to the company was West Yorkshire based Albert Farnell which it bought for £31 million in 2013.  Farnell operated four dealerships - three Land Rover and one for premium used vehicles.  Our Northern transaction services team carried out the buy-side financial due diligence for Vertu on its acquisition.

After years of stagnation we are now seeing a recovery in the deals market. In addition to signs that strongly suggest the economy is improving, this upsurge in activity in the junior market is largely due to the tax changes which came into effect last year.  The changes allow AIM quoted equities to be included in tax efficient savings accounts, as well as removing stamp duty on the purchase of AIM shares.

There is currently a great sense of optimism around the junior market. Although there are concerns that this is a short term reaction to the tax changes, there is no doubt that companies in the North East are once again looking to AIM to access capital in order to realise their potential. 

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Paul Mankin | Partner
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