Another blow to AIM as funding agency Adams prepares to exit

Another small UK business is preparing to delist from AIM, as London’s junior market continues to shrink.   

Investment firm Adams said on Thursday it will leave the AIM exchange early next month after shareholders voted to approve the cancellation of its shares.

The group, which is headquartered in the Isle of Man, announced plans last month to leave London’s junior stock market, citing the high costs and legal burden associated with having a public listing.

It also said the ‘limited liquidity’ of the company’s shares makes its share price more volatile and ‘no longer sufficiently’ provides it with greater access to capital on a medium to long-term basis.

Adams investors accepted a resolution at an extraordinary general meeting on Wednesday for the group to undertake the delisting, meaning the shares will stop trading on the AIM market from 7am on 5 December.

London’s AIM market allows smaller and high-growth businesses to raise money without being subject to the same regulations as larger exchanges.

The number of companies on the AIM market recently fell below 700 for the first time since 2001, according to accountancy firm UHY Hacker Young.

Departure: Investment firm Adams will leave the AIM exchange early next month

Concerns about changes to inheritance tax relief ahead of the Budget led to more than two dozen firms quitting AIM after the general election in July.

While Chancellor Rachel Reeves did not announce that the tax break would be abolished, she still said AIM-listed stocks would have a 20 per cent inheritance tax rate applied to them.

Many analysts believe this will discourage investor interest in British small-cap businesses, which Adams said have suffered weaker liquidity and access to growth capital over the past few years.

It believes many firms in its portfolio are ‘in the situation where their current public market valuations do not reflect their underlying potential and there are no indications that these markets are expected to recover in the foreseeable future’.

As a result, it thinks its strategy to invest in the UK and European small or middle market-cap sectors is attractive and has decided not to make any further investments.

Instead, Adams will undertake an ‘orderly realisation’ of its current investments and return capital to shareholders.

The firm’s bosses acknowledged that because of the low liquidity of its shares, shareholders who wished to sell their stock ‘may have difficulty in finding buyers’. 

Therefore, Adams will purchase the shares for 4 pence each before the cancellation. 

Adams’ holdings include Griffin Mining, which operates a zinc gold project in China, drug developer C4X Discovery, medical device manufacturer NIOX Group, and computer vision technology business Seeing Machines.

Following this, it expects to be either voluntarily wound up or subject to an administrative dissolution.