Twenty years ago today, on 19 June 1995, London Stock Exchange launched Aim, a new market for ambitious growing businesses. With only 10 companies admitted on the first day of trading, with an aggregate value of just £82m, few might have envisaged it would be celebrating its twentieth anniversary this year.
Since its inception, the market has welcomed more than 3,500 companies, raising over £90bn, and has become, without real compare, the world’s leading growth market. This year’s anniversary celebrations mark a significant milestone not only for London Stock Exchange but for London’s status as a global financial centre.
Vital to Aim’s success has been its ability to evolve to meet the changing needs of companies and investors over 20 years. It has always balanced strong investor protection principles with the needs of smaller companies, allowing them to grow and raise capital effectively. This unique ability has allowed it to weather numerous business cycles, such as the dotcom, mining and oil & gas booms and busts, while most European and international growth markets have stagnated or disappeared.
Truly fundamental to Aim’s success has been the support of the diverse range of market participants, who make up the Aim community. Without the long-term support of advisers, brokers, lawyers, accountants, PRs and private and institutional investors, we would not be celebrating today. This year’s anniversary is as much about this group as it is about Aim.
A fact long recognised by this community is Aim’s connection with the real economy, its importance not only to individual companies but to the UK’s prosperity. In nurturing businesses through equity capital, the market is helping them grow and innovate, in turn fuelling the UK’s economic health.
Grant Thornton’s recent report highlighting Aim’s economic contribution to the UK showed that, despite a backdrop of fluctuating equity market conditions over the past 20 years, the market now contributes the equivalent of £25bn in GDP annually to the UK economy. That’s more than either the aerospace or automotive industries, and Aim’s 850 British companies are also responsible for almost three quarters of a million jobs.
These figures are significant and reinforce the premise that access to equity funding is critical to the future success of our economy, which is why London Stock Exchange, along with the wider Aim community, is working hard to bring more companies, as well as liquidity, to this thriving market.
Most recently, we successfully called for Aim shares to be eligible for Isas and for the abolition of Stamp Duty on all growth company shares. These bold measures delivered by government have been a notable success for Aim, boosting private investor access and liquidity on the market.
Greater investment into equity doesn’t replace the importance of banks in our funding ecosystem and their critical part in the economy. But British businesses remain over-reliant on this form of debt lending, unsuitable for backing high-growth and innovative startups and young companies. Equity should be the primary funding mechanism for these stars of the future.
The power of the community coming together to support high growth businesses has also guided the creation of Elite, London Stock Exchange Group’s pioneering business support programme.
Through their participation in Elite, young companies are exposed to leading industry experts, business academics, and entrepreneurs as well as a host of seasoned advisers and investors. Collectively, they have a wealth of experience and practical knowledge, providing Elite’s ambitious firms with the tailored advice and support they need to help grow and access capital, whether via an IPO, private equity, venture capital or business angel investment. It is only this sort of capital which will support these companies as they scale up.
Aim’s twentieth anniversary is the right time to make sure that we, together as a financial community, make every effort to build on the success of the market, for companies, the British economy and the UK’s status as home to a premier global financial centre.
Aim Key statistics
- Aim was launched with 10 companies, with an aggregate value of £82m, on June 19, 1995.
- In 2015, Aim is home to 1,074 businesses, with a combined market cap of £75bn.
- In total 3,602 companies have been admitted to Aim since its launch, raising £92bn – £40bn at IPO and £52bn through further fundraisings.
- The average market capitalisation of an Aim company has grown from £8.2m in 1995 to £70m in 2015.
- Household names that have floated on Aim include Asos, Dominos, FeverTree Drinks, Majestic Wine, and YouGov.