Arguably the world’s most successful growth market, the AIM Market is hugely popular with companies looking for investment capital, as well as with private and institutional investors. Find out some of the reasons why the FTSE AIM All-Share has proved to be so popular with this detailed introduction.
When was the Alternative Investment Market (AIM) launched?
AIM was launched on 19th June, 1995, replacing its predecessor, the Unlisted Securities Market (USM).
Why was AIM established in the first place?
The AIM market was established to allow smaller companies access to capital and investment that might not be so accessible were they required to meet a long list of rules and regulations. By doing so, the market provides investors access to a pool of smaller companies with higher growth potential.
How many companies are quoted on AIM?
At launch, only 10 companies were listed on AIM with a combined market cap of £82.2m. Fast forward 24 years, and there are now just under 900 companies listed. Rewind to before the financial crash in 2008, though, and there were nearly 1,700 companies.
What is the average size of an AIM company?
The market capitalisation of companies quoted on AIM vary massively. For instance, at one end of the spectrum, you have the likes of Burford Capital with a market cap of £3.76 billion, but at the other end of the spectrum, there are over a dozen companies with a current market cap of less than £1 million.
Nevertheless, across all AIM-listed companies, the current average market cap is £112.66 million. The median, meanwhile, is £28.4 million.
The following is regularly updated with the largest and smallest AIM companies by market cap.
What are the main business sectors on AIM?
In terms of constituents, the following sectors have the largest prominence on AIM: Software & Computer Services (92), Mining (90), Support Services (87), General Financial (85), and Oil & Gas Producers (76).
In terms of market cap, the following sectors have the largest combined value: General Financial (£11.24bn), Support Services (£10.97bn), Pharmaceuticals & Biotechnology (£10.19bn), Software & Computer Services (£10.02bn), and General Retailer (£7.12bn).
This section of the website is where you can find all AIM-listed companies by sector.
What is the distribution of AIM companies by country?
Just over two-thirds of AIM-quoted companies are from the UK. The rest are spread across a wide range of countries, with a noticeable number being registered in: Guernsey, Jersey, Isle of Man, Cayman Islands, Cyprus, Ireland, Australia, USA and Canada. There are currently only two companies from China.
How many AIM companies pay investors a dividend?
Just under a third of AIM-listed companies have paid shareholders a dividend within their most recent financial year. The largest companies to have paid dividends include: Burford Capital Ltd (BUR), Fevertree Drinks PLC (FEVR), and Abcam PLC (ABC). The smallest companies to have paid dividends include: Holders Technology PLC (HDT), PHSC PLC (PHSC), and Aeorema Communications PLC (AEO).
More information can be found here relating to dividends on AIM.
What are the benefits for a company joining AIM?
There are a variety of reasons as to why companies might determine it in their interest to join the market:
- Access to investment capital to support further growth
- The opportunity to enhance the image and credibility of the company on an international scale
- A regulatory system geared towards the needs of smaller, growing businesses
- Quotation on one of the most liquid capital markets for the trading of shares in smaller businesses
- Support from experienced advisers who are able to understand the needs of ambitious companies
- A means to undertake further fundraising, thus enabling continued growth of the company
- A way in which to take advantage of opportunities to acquire other businesses
- A strategic exit route for existing investors
How successful have companies been on AIM?
There have been plenty of examples of companies to progress from AIM to the Main Market following a successful period of prolonged growth – some of the most notable examples including: Dominos Pizza Group, Hiscox, Unite, Big Yellow Group and GVC.
Irrespective of progression, there are a huge number of companies still quoted on the AIM market who have enjoyed terrific success since first issuing their shares to investors. Take, for example, the likes of ASOS, Fevertree Drinks, Boohoo, Hutchinson China Meditech, Purplebricks and Breedon Group – many of these are household names with a large amount of trading history and very sizeable market caps.
What are some of the most high profile failures on AIM?
For every success story on AIM, there are many more failures. Contributing to this is the fact that the market has seen almost every investment fad going pass through its auctions – from the dotcom boom, to gambling, to overseas property, and to small resources stocks.
The largest company to fail, however, was ScotOil Petroleum – a North Sea explorer known for most of its existence as Oilexco. With a market capitalisation of over £2 billion at its peak, the company eventually graduated from AIM to the Main Market, but a fall in oil price prompted a collapse into administration in 2009.
Another high-profile collapse caused by a drop in resource price was African Minerals, which despite being valued at above £2 billion at its height, entered into administration following the fall in iron ore price in 2015.
What indices are used for measuring AIM?
In order to represent the performance of companies quoted on the market, the following three real-time indices have been devised:
- FTSE AIM 100 Index (largest 100 companies)
- FTSE AIM UK 50 Index (largest 50 UK companies)
- FTSE AIM All-Share Index (all AIM-quoted companies)
There also exists a fourth end-of-day indices called the FTSE AIM All-Share Supersectors, which consists of all FTSE AIM All-Share companies classified within their respective ICB Supersector.
What are some of the pros as an AIM investor?
Perhaps the main attraction of this particular market is that the companies listed have the potential to grow at a rate far beyond those listed on the Main Market. Time it right, and the share price of your investment can double, triple, or even more in a relatively short period of time.
On top of such gains to be made, the UK government have also introduced various tax reliefs to incentivise investment into companies on AIM – all of which are covered in more detail within this AIM tax benefits article.
What are some of the cons as an AIM investor?
AIM naturally comes with a higher level of risk, related to the fact that a large proportion of companies are relatively small and in their infancy, and that the market is underpinned by a regulatory environment a lot less onerous than the one in place for the Main Market.
Where can I find out more information on the AIM market?
Another downfall of the AIM market is that the companies listed do tend to be under-researched by comparison to their larger counterparts and have much fewer resources for analysis.
Nevertheless, there are resources out there to help inform any of your AIM-related investment decisions – from company reports, bulletin boards, discussion forums, financial news websites, investor relations pages, and even social media.
As discussed in this feature on AIM tips and resources, the decision to invest through AIM does not equate to putting blind hope in a share price that you have to simply hope will go in the right direction.