THE WORLD’S most successful growth market and home to 50 Yorkshire companies, AIM, turned 21 this month.
As it celebrates this important milestone, it is an opportunity to shine a light on regions such as Yorkshire and the companies contributing to the market’s success.
Yorkshire’s AIM companies have an aggregate market capitalisation close to £4.6bn, more than double that of three years ago, when it was approximately £1.9bn. And today the average value of a Yorkshire company on AIM is £92m, compared to £43m in 2013. Companies include Fishing Republic, one of the UK’s biggest fishing tackle retailers and Gear4Music, online music equipment and musical instruments retailer.
This not only reflects the growing number of successful entrepreneurial businesses flourishing across the region but also AIM’s ability to support more mature companies.
Only last month, Batley-based financial services firm, Morses Club, floated on the market, raising £68m, valuing it at £130m. It is just one of the 20 successful initial public offerings, including chocolate maker and retailer, Hotel Chocolat and British fashion chain, Joules, we’ve seen on AIM in the first half of 2016.
Ninety per cent of these stocks have been trading up, with average post IPO performance running at more than 20 per cent. They have an average market capitalisation of £100m, a stark difference compared to a decade ago when the average value of new companies joining AIM was £17m.
Again, the 20 new companies show the market is stepping up, particularly post the financial crisis.
Whilst we’ve seen other markets struggling, AIM has been outperforming the main market in some respects. Average performance of AIM companies that joined in the past three years is 11 per cent, compared with 6 per cent for the main market.
That’s not to say that investment in the financial markets doesn’t carry risk. When investing equity capital there is always an evaluation of risk versus reward, but this is a feature of all investments across all financial markets, not just AIM. And London Stock Exchange is committed to giving investors the opportunity to have a stake in innovative ambitious companies that are shaping the future of global economies.
AIM is a tremendous success story for Britain, re-balancing the economy away from debt towards equity and boosting access to vital growth finance for thousands of ambitious businesses. Equity funding is the right sort of capital for these companies because they should be spending as much as they can to innovate, grow and create jobs, rather than having to prioritise serving a loan.
Figures for the latest year available on AIM’s impact on the wider economy show companies who raised capital on AIM, instead of borrowing from the banks, created 731,000 jobs, paid £2.3bn in tax and contributed £25bn alone to UK GDP.
21 years later, what AIM has achieved is no mean feat. The total value of companies on the market is £75bn and it has also supported over 3,650 British and international companies, raising nearly £100bn for them to invest and grow.
And whilst most international growth markets have stagnated or disappeared over the years, AIM has prospered, weathering numerous peaks and troughs, such as the dotcom, mining and oil & gas cycles.
This track record and the proven resilience of the AIM community will be more important
than ever over the coming months as companies need certainty about the availability of capital to fund their long term development plans.
In June 1995, the market was launched with just 10 companies and an aggregate value of £82m.
More than two decades on, AIM is now the world’s most successful and established market for growth companies. As it continues to connect thousands of smaller companies to capital, support the wider UK economy and develop in its own right, we must ensure it carries on thriving and supporting companies from Yorkshire and beyond.