The UK’s Alternative Investment Market (Aim) has hit a troubling milestone, shrinking to its smallest size in 23 years. Graeme Wearden, reporting for the Guardian, examines the significant drop in listings and how recent policy discussions may be influencing investor confidence.
UHY Hacker Young, an accountancy firm, revealed that a staggering 92 companies have delisted from Aim over the past year, while only 10 new companies have joined the market, leaving a total of 695 companies listed. This decline has continued since the general election in July, with 26 companies exiting Aim, marking the first time since 2001 that the number has dipped below 700.
Colin Wright, a partner and chair at UHY Hacker Young, suggested that the looming abolition of inheritance tax (IHT) relief on Aim shares, as indicated by Chancellor Rachel Reeves, is contributing to the downturn. He noted, “As Aim experiences a further glut of companies leaving the exchange, the government needs to urgently address how it can help. Cutting IHT relief on Aim shares would do the opposite.” Wright emphasized the importance of maximizing incentives for both small-cap companies and investors as fewer firms consider listing.
Dominic Tayler, managing director of Oakglen Wealth, pointed out that about 15% of Aim shares are held through funds that benefit from business relief for inheritance tax. He highlighted the market’s struggle with liquidity, attributing part of it to a shift among investors towards passive tracking funds and pension funds overlooking smaller companies. Tayler remarked, “Speculation around the removal of business relief for Aim in the forthcoming budget has compounded this. Not only is this bad for business, it also harms long-term savers who are the lifeblood of private investment.”
This month, online retailer N Brown announced its decision to leave Aim after accepting a takeover bid from Joshua Alliance, which revealed that the company was not gaining from its Aim listing and faced significant associated costs.
Research commissioned by the London Stock Exchange Group (LSEG) highlighted the importance of Aim, noting that companies listed on the market contributed £68 billion in gross value added to the UK economy last year and paid £5.4 billion in corporation tax. Marcus Stuttard, head of Aim and UK primary markets at LSEG, mentioned that Aim has facilitated more than 4,000 companies in raising nearly £135 billion from investors since its inception in 1995.
As Aim celebrates its 30-year anniversary, Stuttard stressed the critical role the market plays in the UK economy, stating, “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.”
