AIM’s coming of age
July 22, 2016
- AIM has been supporting growing companies for 21 years.
- AIM's ability to evolve has been a key factor in its success.
- AIM helps ambitious entrepreneurial companies access capital for growth and expansion during uncertain times.
A belated Happy 21st Birthday to AIM. Since 1995, AIM has evolved and there is no doubt that it has become one of the most successful growth markets globally.
Despite London being absent from the top 5 initial public offerings (IPO) in Europe in Q2 2016, AIM has been relatively active in terms of new companies coming to the market. Alongside promising early stage companies, AIM has been the chosen market for well known names such as Joules, Hotel Chocolat and Time Out Group. They join over 800 entrepreneurial UK companies who have decided to make it their home over the years.
Supporting growing companies
Although AIM IPO activity over the past 18 months has been depressed, largely due to wider geopolitical and macroeconomic conditions, existing AIM companies have been able to raise £7.2bn in secondary issues in 2015 and the first half of 2016. The ability for companies to raise money during challenging times reinforces the role AIM plays in supporting growing companies. Even in the midst of the last recession, AIM companies were able to return to the market to raise further funds. Arguably other sources of funding were not available, with 2010 being the 4th strongest year on record when £6.3bn was raised.
AIM is a key component on the funding ladder for growing SMEs and complements the increasing innovative equity and debt funding options available. We are seeing innovative finance solutions in invoice financing, peer-to-peer lending and crowdfunding complementing the AIM option. An exciting recent development in alternative finance is that the crowdfunding platform, SyndicateRoom, can now provide its investors with access to both the private and public equity markets. Indeed, AIM quoted Fitbug is currently looking to raise £2.6m via SyndicateRoom which illustrates how AIM continues to adapt to the needs of its companies and investors.
Evolution helps success
AIM’s ability to continually evolve is a key factor of its success. Highlights of its evolution include the creation of FTSE AIM indices in 2005, the launch of AIM Italia in 2008, the inclusion of AIM shares in ISAs in 2013 and the abolition of stamp duty on the trading of AIM shares in 2014.
As AIM has evolved so too have its constituents. New AIM companies show a shift away from the dot.com start-ups and international mining, oil and gas exploration & production (E&P) companies that we saw in the 1990’s and early 2000’s. What we now see are larger, more established, SMEs supported by management teams who recognise the hard work in getting through the IPO and are prepared to put in the effort to be a successful public company as well as being more realistic about what joining this growth market can offer. We have also seen a large number of companies delist from AIM during the financial crisis years – not just those that joined the market before they were ready for the public market scrutiny and too early in their stage of development to be a PLC, but also more positively, those that have been acquired or transferred to the Main Market.
Supportive post-referendum platform
As we move into more uncertain times following the outcome of the EU referendum, AIM remains a supportive platform for ambitious entrepreneurial companies, enabling them to continue to access capital to continue to grow and expand.
For new companies considering an IPO at this time early preparation for the different dynamic of being a public company, together with a compelling and credible growth story will ensure that when the IPO window is fully open again, we will continue to see top quality companies joining AIM reinforcing its status as the growth market of choice.
By the time AIM turns 30, I don’t know what the political and economic situation will be but I’m sure AIM will have evolved further, adapting to the ever changing needs of companies, investors and advisers.
Get in touch if you would like more information about AIM.