AIM rebounds: Why investors are turning to London’s growth market again

After a subdued couple of years, London’s Alternative Investment Market (AIM) is showing strong signs of revival. This resurgence comes at a time when uncertainty in the US markets is prompting investors and companies alike to take a fresh look at the UK.

Four new companies listed on AIM in the first five months of 2025*, raising £111.8m in total. This compares to the ten companies that listed throughout the whole of 2024, raising £119.6m in total during last year.

AIM has underperformed against its longer-term track record for IPOs in the past couple of years, meaning this market bounce back in the start of this year is likely to provide some optimism for investors and those considering an IPO.

Over the last decade AIM has been Europe’s most active growth market by far, raising £39bn of long-term capital since 2017. This accounts for 53% of the money raised on all European growth markets. In the past three decades AIM has helped over 4,000 companies raise £135bn**.

The attraction of the US equity markets may be fading

A crucial – and very recent – trend working in AIM’s favour is what we might term the ‘end of US exceptionalism’ in the global equity markets. The tariffs announced by the US Government in April have led to an outflow of international investors from the US. European markets are benefitting from this equity outflow, and UK indices like the FTSE 100 have consequently weathered the stock market volatility better than their US counterparts.

The US’s Liberation Day resulted in the S&P 500 falling at its fastest rate since 1987 before having its largest one-day gain since 2008. This level of volatility creates lasting uncertainties. Throughout May, this resulted in the US capital markets losing a little of their historic prestige, possibly making the US less of magnet for IPOs. Investors are averse to uncertainty, and the continual changes to tariffs have led to considerable uncertainty.

This uncertainty has intensified as the markets perceive some of the US Government’s policies to be economically unorthodox. For one, some felt the calls from the US Government to lower interest rates was a questioning of the independence on the Federal Reserve. Such moves have unsettled investors.

The upshot for 2025 is that shares listed in the US won’t necessarily guarantee the same level of investor interest as they did in previous years. The recent turmoil in the markets has made the UK, including AIM, relatively more attractive to international investors.

The UK is now very competitive for IPOs, and especially supportive for companies with a valuation below $500m. 68% of London-listed companies have a market cap below $500m, compared to just 48% in the US***. The disparity is a strong indicator that the UK has an investor base that is much more used to investing in junior companies.

The success of Raspberry Pi Holdings’ IPO on the main market in June last year, raising £179m on a market capitalisation of £542m, shows the UK markets can still raise large amounts of capital for small and mid-cap companies. The long-term track record of the LSE main market and AIM, versus rival European stock markets, in raising new money will hopefully make London the home of more European companies that decide that a US listing is not for them.

New AIM consultation represents a very positive step

Research by the LSE also shows that the cost of listing in London is very competitive compared to listing in the US. That competitive advantage could also be boosted further following the London Stock Exchange publication of the Shaping the Future of AIM discussion paper in April 2025, which we explore further on page 16.

The fact that the LSE is eager to have an open discussion about AIM, including its regulatory architecture, creates a healthy culture where businesses feel involved.

To begin with, businesses would welcome a reduced regulatory burden, which incurs costs that can look prohibitive for smaller companies at the early stages of their growth cycle. Equally, any regulatory streamlining that speeds up the process of listing on AIM for companies would also be a welcomed improvement.

The LSE is also inviting opinions on how to change the NOMAD role at AIM companies. One interesting suggestion is to reduce disclosure obligations, which duplicate a role already performed by lawyers, in order to develop the NOMAD role to focus more on corporate finance advice in disclosure discussions with other advisers.

The LSE’s goal is to ensure that AIM remains a premier growth market for developing and entrepreneurial companies. If this is achieved, AIM will provide an attractive venue for growth companies from both the UK and overseas, which should lead to AIM companies making a significant contribution to the London and UK economy.

By combining high quality companies, investor interest and an opportunity to improve regulation, AIM is in a strong position to win more than its fair share of IPOs in the years ahead.

*Year to 29 April
**Source: London Stock Exchange
***Source: London Stock Exchange

The next step

At UHY, our specialist capital markets team have extensive experience working with companies listed, or seeking to list, on various markets. Please get in touch with Colin Wright or your usual UHY capital markets adviser for any enquiries regarding the above.