AIM turns thirty: Junior market is all grown up

Fast fashion retailer Asos, upmarket tonic water maker Fever-Tree, budget airline Jet2 and pizza franchise Domino’s might sound like an unrelated handful of household names – but they have one thing in common.

They all started their lives as listed firms on London’s junior AIM stock market, which turns 30 this year.

The Alternative Investment Market was launched in June 1995 to give small and medium size growth companies access to capital. Since then, it has admitted more than 4,000 firms, raising more than £135 billion in total.

According to the latest statistics, AIM-listed companies contributed £68 billion to the British economy and supported 770,000 jobs in 2023.

Over the past four years the direct economic contribution made by AIM firms has grown by 6.6 per cent, according to analysis by accountant Grant Thornton.

But as AIM enters its 30th year, it is facing an existential threat.

High flyiers: Jet2, Domino’s Pizza and Asos are success stories

Experts have warned that the market is shrinking with one in three AIM-listed companies vulnerable to a takeover.

Loungers, the owner of casual dining chain Cosy Club, in November agreed to be bought by an American private equity firm for £338 million.

And just last week, retailer Quiz said it was going private, saying AIM ‘is not likely to provide significant additional or more cost effective options for funding’ than can be achieved privately.

That came after a string of high profile exits in the preceding years.

Online estate agent Purplebricks delisted in 2023 after shareholders voted to sell the firm for just £1 after a string of profit warnings.

Upmarket confectionery chain Hotel Chocolat left the market when it was sold to Mars for £534 million last year.

Over the past 30 years, AIM has also gained something of a ‘Wild West’ reputation.

Collapses can be sudden and unexpected, while the exchange’s reputation has been muddied by accounting scandals at Healthcare Locums and Patisserie Valerie.

As a result of the ‘light touch’ regulation, some say it is a home for speculative, flash-in-the pan, high risk companies.

And in a further blow to the exchange, Labour Chancellor Rachel Reeves announced in the Budget that all AIM-listed shares would be subject to 50 per cent Inheritance Tax from April 2026.

Currently there is 100 per cent tax relief on shares held for two years at the time of the owner’s death, with a few exceptions.

Susannah Streeter at investment platform Hargreaves Lansdown said: ‘This small change might have big repercussions when it comes to creating a nurturing environment for entrepreneurial businesses.’

Caroline Simmons, chief investment officer at wealth manager Quilter Cheviot, added: ‘Depressed valuations are likely to mean overseas buyers will be circling AIM-quoted firms in 2025. This could drive investors towards less transparent and potentially riskier unlisted portfolios.’

But there have been success stories on the growth market – with firms moving to the main market and becoming household names after cutting their teeth on AIM. Dan Coatsworth, an investment analyst at investment platform AJ Bell, said: ‘AIM has been a good place to support small and mid-cap companies as they grow bigger. Plenty of companies have been able to tap investors for money on a regular basis to support their growth plans and many have gone on to do great things.’

Asos started its life as a PLC on AIM before moving to the main market in 2022. Domino’s Pizza UK delisted from Aim in 2008 when it joined the main market.

Other well-known names still on AIM include Vimto maker Nichols and fashion retailer Boohoo.

Only ten companies that joined the exchange when it opened are still trading on Aim. Of those, the best performer by far is Jet2. An investor who bought £1,000 of Jet2 shares on the first day of trading in 1995 and held on to them would be sitting on £73,000 today. Coatsworth said: ‘Starting life as a business transporting flowers, it morphed into a broader cargo business by air and road, but the turning point was the 2003 launch of a scheduled passenger airline.

‘It is now a serious competitor for easyJet and Ryanair. It’s also made investors a mint.’

In a quiet year for UK listings, there were ten initial public offerings on AIM including restructuring specialist Rosebank Industries, game developer Winking Studios and salt substitute Microsalt.

Half of the new admissions were from US companies and the average price performance so far is up 44.4 per cent, according to London Stock Exchange Group data.

In AIM’s 30th year, City experts called on the Government to recognise its importance to the UK economy. Simmons said: ‘The success of AIM is crucial for the UK, as it often serves as an entry point for companies to list domestically.

‘Without adequate support, firms may seek private funding and opt to list on international markets, weakening the UK’s market position. At the very least, we would urge the Government to commit to maintaining the tax position on AIM for at least a decade to provide stability and bolster its attractiveness.’