AIM: A field of dreams or graveyard of failed ambition?

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The AIM market is celebrating its 20th birthday this month and while there have been some massive success stories there have also been some huge disasters.

The statistics are impressive. Over 3,600 companies have joined AIM since its inception in June 1995, raising £92bn in total.

New research by Grant Thornton claims that AIM contributes £25bn to the UK economy each year and has generated almost three quarters of a million jobs in Britain alone.

Xavier Rolet, CEO of London Stock Exchange Group, told investors at the market’s twentieth anniversary celebrations: “Central to innovation, job creation and productivity, these companies have played a unique role in fuelling economic prosperity in the UK, a dynamic recognised by Government, business and investors.

“AIM is a great British success story and today, it is the most successful market for ambitious growth companies in the world.”

He was backed up by Greg Hands MP, chief secretary to the Treasury, who added: “Britain’s innovative and dynamic SMEs are the backbone of our economy.

“AIM and London Stock Exchange have provided an active and thriving market for a vast number of high growth SMEs, significantly contributing to the wider UK economy.

“That’s why this Government has supported AIM by removing Stamp Duty on the purchase of shares on growth markets and allowing AIM shares to be held in ISAs.”

But some analysts are a little more sceptical.

Research by Hargreaves Lansdown shows that AIM stands 24 per cent below its starting level.

“AIM is a market suited to investors who are sophisticated, brave and patient,” said senior analyst Mr Khalaf.

“Anyone who wants to gain exposure to smaller companies, but doesn’t have the expertise to pick stocks should consider investing via a fund.

“The index is still 24 per cent below its starting level. While AIM has been home to many individual success stories, the market as a whole has been a graveyard of failed ambition.”

AIM shares have become more popular with private investors in recent years, partly as a result of them being allowed within ISAs, and the generous inheritance tax treatment.

Successes like ASOS and Domino’s Pizza have also helped to raise the profile of the market.

But Mr Khalaf said that the performance of AIM compares poorly with indices from the main market over the same time period.

“The conclusion is AIM is not a market for investors to buy en masse in the same way they may do with the FTSE 100 through a tracker fund. Instead they need to approach it with a fine toothcomb to make sure they are picking out the winners and avoiding the deadwood,” he advised.

ASOS is currently the biggest stock on AIM, with a market cap of £3.2bn.

£1,000 invested at launch in 2001 would now be worth an impressive £160,000.

It is big enough to be in the FTSE 250 if it was on the main market, as are around a dozen of its fellow AIM stocks.

Here in Yorkshire, AIM’s notable success stories include Renew Holdings, Getech, Emis and Tissue Regenix.

​​Colin Glass, ​a founding partner of accountancy firm WGN, said AIM remains a viable alternative for small companies to raise money, but suggested that efforts to improve corporate governance could amount to overkill.

“There’s an element of common sense in it. Integrity is very important; you should apply that across the board, you shouldn’t have to have it written down, set in tablets of stone in some corporate governance manual,” he said.

But perhaps the best advice comes from Mr Khalaf: “There have been some terrific success stories on AIM but there have been plenty of flops too.

“It is therefore a market to go fishing in with a line and pole, rather than a great big net.”