Marcus Stuttard
For nearly 30 years, AIM has been a leading global growth market, and the most active in Europe. Throughout, it has enabled pioneering companies to raise vital equity capital, even when other sources have been scarce, to fund innovation, drive growth and productivity. It has made an important contribution to the UK economy through company tax contributions, supply chain expansion as well as job creation, which in turns drives spending by those employees in their local communities.
In research commissioned by the London Stock Exchange, Grant Thornton found that in 2023, UK companies admitted to AIM contributed £68 billion in Gross Value Added (GVA) to the UK economy, through direct, supply chain and induced impact. They have also made a significant corporation tax contribution of £5.4 billion to the Exchequer. These companies represent all of the major sectors and are broadly spread across the UK.
But the ability of AIM to enable these companies to generate these contributions is not a position we should take for granted. Whilst AIM has proven to be a robust market over the last 30 years, wider macro-economic conditions have impacted the ability of many, particularly smaller, companies to raise finance from domestic investors, both retail and institutional. Total capital raised by AIM companies has fallen by 71% between 2020 and 2023, with smaller quoted companies being most impacted with net UK equity fund outflows in three of the last four years. As a consequence, the number of companies on AIM has fallen from 819 at the end of 2020 to 704 companies, valued at £76 billion, today.
Despite this, there are reasons to be optimistic. The multifaceted reform agenda currently underway includes measures to ensure there is sufficient capital available to companies across our country and will build on the existing strengths of the UK’s capital markets.
Since its inception in 1995, AIM has supported more than 4,000 companies to raise nearly £135 billion from a committed base of investors together with support from an ecosystem of advisers including nominated advisers, brokers and market makers, who have built their own businesses around supporting growth companies. Crucially, almost two thirds of this capital (£87 billion) has been raised through further issues. And the amount of further fund raising has been significantly larger than capital raised at admission (£48 billion). It is one of AIM’s greatest strengths - the relative ease with which companies have raised additional capital throughout their growth lifecycle.
Furthermore, investors have been able to access these companies within a tailored regulatory environment, helping to support a vital part of the nation’s wealth creation process. Additionally, a number of schemes and tax reliefs, including EIS, SEIS, VCT, ISA eligibility, Business Relief, and exemption from stamp duty, provide a well calibrated package of support that encourages investment in recognition of the role that AIM plays in supporting this vital segment of the economy.
AIM’s regulatory framework remains purposefully designed to provide the flexibility a growing company needs, giving investors confidence in the standards of disclosure and protections provided to them. This includes the processes to prepare for an IPO that enhance and strengthen the business’s operations, implementing procedures that optimise business performance and financial disciplines that underpin public company reporting along with the adoption of a recognised corporate governance code. Together these help to create more resilient and sustainable businesses. In fact, many of the Main Market reforms implemented in July of this year, such as a more streamlined, disclosure-based regime for further issues, are a strong endorsement of the current AIM model.
All that said, we recognise that recent market conditions have been challenging and there is a pressing need for greater investment into high growth companies which will lead to greater returns for investors and savers. This is why we continue to advocate for greater focus on this issue through initiatives such as the roll-out of the Mansion House Compact and we welcome the pensions review currently underway by the UK Government. The consultation on the Public Offers to Trading Regime should also result in AIM companies being able to more easily include a wider set of investors in transactions, thereby broadening their shareholder register and increasing liquidity.
As AIM turns 30, we should celebrate the success of companies past and present who have made such an important contribution to our economy. But it is vital that we protect the market and its structures so that companies in the future can continue to support this positive legacy of economic growth and deliver returns for investors and savers.
You can download Grant Thornton’s report, ‘The Economic Impact of AIM’, here: Report: The Economic impact of AIM companies | Grant Thornton.
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