The number of companies on London’s AIM market worth more than £1 billion has hit a nine-year low. A mere six stocks were worth more than £1 billion at the end of November 2024 compared with 30 at the end of 2021.

From those 30 companies and excluding those still worth more than £1 billion, seven have disappeared through takeovers, three have moved to the Main Market, and the rest have fallen below the £1 billion level due to bad news or other negative factors. The last time AIM ended a calendar year with less than six stocks worth in excess of £1 billion was 2015. There were only four qualifying names at that point: ASOS (ASC), Abcam, New Europe Property Investments and Hutchison China (now HUTCHMED (HCM:AIM).

This perilous situation coincides with more bad news for AIM. The total number of companies on AIM at the end of 2024 hit the lowest level since the end of 2001 at 688 stocks, a far cry from the near 1,700 seen at its peak in 2007. As of 30 November 2024, the year had seen the second lowest ever number of IPOs since AIM launched 30 years ago in 1995.

• Only six companies on AIM worth more than £1 billion at the end of 2024.
• Over the past 20 years, AJ Bell calculates that 128 companies have moved from AIM to the Main Market.
• The total number of companies on AIM at the end of 2024 hit the lowest level since the end of 2001 at 688 stocks.

AIM needs a reboot if it is to stay relevant for another 30 years. The London Stock Exchange, FCA and government need to consider more incentives for companies to list on AIM and ways to attract a broader pool of investors to want to own the shares.

There is a sense of urgency to rejuvenate AIM. After all, if takeovers continue to dominate the UK market and more companies move up to the Main Market, AIM will struggle to attract new listings. Companies considering an IPO want to go where there is a big pool of prospective investors keen to support growing businesses and a rapidly shrinking market is an instant turn-off.

In its defence, AIM has served companies well over the years, with plenty of success stories. Yes, there are tales of woe and scandals dotted around, but it has fulfilled its purpose as a growth market. AIM has acted as a stepping stone for growing companies to expand and mature, and it’s only natural that the most successful ones graduate to the Main Market.

AIM SUCCESS STORIES

Over the past 20 years, AJ Bell calculates that 128 companies have moved from AIM to the Main Market including Entain (ENT) (previously called GVC when it was an AIM stock), Melrose (MRO) and Unite (UTG) which are now FTSE 100 stocks; and Breedon (BREE), Domino’s Pizza (DOM) and Genus (GNS) which now sit in the FTSE 250 index.

Companies move from AIM to the Main Market for two key reasons:

• Inclusion in FTSE indices. Qualifying for the FTSE 250 or FTSE 100 would trigger tracker funds to buy the shares and being in either index can lead to greater liquidity for the stock.
• Boost reputation. Being listed on the Main Market can increase a company’s profile among the public and its peer group, which can lead to greater media coverage and potentially more analyst research coverage of the stock. A lot of investors dismiss AIM stocks, believing it to be a market full of tiny companies, whereas Main Market stocks are often considered to be more established businesses.

Numerous stocks transferring from AIM to the Main Market have subsequently been taken over as moving to the more prominent exchange can often signify a company that’s going places.

Larger companies often look at the mid-cap space for acquisitions to augment their own growth, either buying smaller rivals or a company that takes them into a new area. 

For example, Tesco (TSCO) secured a strong foothold in the wholesale market through its £3.7 billion acquisition of Booker in 2018. Booker had previously moved up from AIM to the main market in 2009, at which time it was valued at approximately seven times less than what Tesco paid at £491 million.

Other AIM-to-Main Market alumni include Peppa Pig rights owner Entertainment One which was gobbled up by Hasbro (HAS:NASDAQ) for £3.3 billion in 2019; and gold miner Centamin was recently bought by AngloGold Ashanti (AU:NYSE) for £1.9 billion.

The pace of companies leaving AIM for the Main Market has been fairly steady for the past decade or so, at between two and six stocks annually. Two stocks moved up in 2024: copper producer Atalaya Mining (ATYM) and financial services provider Alpha Group (ALPH).

WHICH STOCKS COULD BE NEXT TO MOVE TO THE MAIN MARKET?

Gamma Communications (GAMA:AIM) plans to move to the Main Market from AIM in mid-2025, saying the move should enhance its reputation. It’s one of the six AIM stocks currently worth more than £1 billion, so its move is significant from the perspective of the junior market losing yet another key player by size.

Of the remaining five AIM stocks worth more than £1 billion, airline-to-holidays group Jet2 (JET2:AIM) is the most obvious company to make the transition to the Main Market. Valued at £3.3 billion, Jet2 would be on the cusp of the FTSE 100 if it shifted to the top stock exchange.

Jet2 is a perfect example of a business which has been transformed during its time on AIM. Starting life as a company transporting flowers, over the years it morphed into a broader cargo business by air and road, but the real turning point was the 2003 launch of a scheduled passenger airline. Its leisure activities have been a runaway success.

Jet2 has earned a reputation for good customer service and reliability and is now a serious competitor for the big low-cost airlines EasyJet and Ryanair. It’s also made investors a mint as it is the best performing stock on AIM since the market was launched in 1995, with a 6,760% share price return.

Over the past 10 years, the average size of a company moving from AIM to the Main Market is £586 million. There are currently 20 stocks on AIM larger than that size, including Learning Technologies (LTG:AIM) which is in the middle of a takeover situation.

Possible sub-£1 billion AIM contenders for transferring to the Main Market include engineering services provider Renew Holdings (RNW:AIM) and construction group SigmaRoc (SRC:AIM), both of whom have repeatedly made acquisitions to drive growth. Valued at £720 million and £830 million respectively, they are both sufficiently mature enough to attract broader institutional investor interest, and both would comfortably slot into the FTSE 250 index given their size.

One of the key reasons why companies have historically chosen AIM over the Main Market is the ability to make acquisitions without a shareholder vote, with the exception of reverse takeovers. It meant they could find opportunities and act on them quickly. Changes to the listing rules in 2024 have put the Main Market on a more level playing field with AIM in this regard. That suggests AIM will now have greater competition in terms of where companies choose to list.

‹ Previous2025-01-16Next ›