This press release was featured in The Times, CityAM, Reuters, This is Money, The Standard and Mail Online
There are now just 679 companies left on AIM. This is its lowest level since 2001 and is a dramatic shrink from the market’s peak in 2007 when 1,694 companies were listed on AIM.
The main reasons given by companies for leaving AIM are the cost burdens and excessive red tape that come with being listed on AIM. Some companies say this makes it undesirable to remain listed. 11 companies left AIM last year citing the costs of maintaining a listing or the associated regulatory burden.
Data from the British Business Bank says it costs around £600,000 to list on AIM and £500,000 a year to maintain a listing.
In addition to the number of companies leaving AIM, IPOs have fallen to their lowest level since 2008/9, with just 10 last year. The low number of IPOs is partly due to the perceived costs of listing on AIM market versus raising capital through private equity.
The overall weakness of the UK economy has also contributed to the shrinkage of AIM with 21 companies delisting from AIM because of financial stress and insolvency.
Colin Wright, partner and UHY UK Group Chairman commented:
The AIM IPO pipeline needs a jumpstart. Cutting back on some of the regulations surrounding AIM could help provide that.
After all, the new Government has asked regulators to take a radical approach to cutting red tape to deliver growth.
Trimming some of the reporting and less important corporate governance burdens on AIM companies would make the market more competitive. Ever stricter rules for AIM companies have increased the quality of companies on AIM but perhaps that process has gone too far. AIM now faces much tougher competition both from other European stock exchanges and from private equity. Obviously, raising money from private equity comes with very few of the regulatory burdens of an AIM listing.
The Government’s halving of the inheritance tax relief on AIM shares has not helped to stimulate the market. The AIM market is however in the process of reviewing its listing rules, following an update of the listing rules for the LSE main market last year.
The AIM market needs all the help it can get to boost the numbers of companies listed on its exchange and the liquidity of the shares traded. Possible changes to Cash ISAs may help as UK savers may then be encouraged to invest directly in shares. UK investors have tended to prefer holding their savings in cash rather than investing in individual shares.
It is estimated that over 60% of US citizens invest directly in stocks and shares whereas less than a quarter of UK households do so. The UK Government and the LSE needs to take measures to encourage more retail investors which should help UK families prosper by achieving higher returns than cash and in turn providing more capital to growth companies in the UK to invest in their businesses.
*12 months to February 12 2025
AIM shrinks by 61 companies in 2024 - companies left on AIM at lowest level since 2001
