AIM to shed billions as market projected to shrink by a fifth
London’s junior stock market is set to deepen its listing crisis as it heads towards its 30th birthday.
The alternative investment market (AIM) is projected to have £12.3bn of market capitalisation, after 61 companies announced plans to ditch their listing.
A combination of mergers, private equity takeovers, delistings in favour of private securities venues and promotions to the main market will see the exchange shrink by 20 per cent if all current proposals go ahead as planned.
Abby Glennie, co-manager Aberdeen’s UK Smaller Companies Growth Trust, said AIM had been “brutally knocked back by outflows” and faced a “transitional moment” to re-evaluate.
Asset manager Aberdeen has lobbied the government to introduce financial incentives encouraging private investment to support growth, as opposed to mandating minimum allocations for pension funds.
The firm has also called for the government to expand beyond venture capital and private equity companies to include smaller businesses, private debt, real estate and infrastructure.
AIM under tax threat
Chancellor Rachel Reeves targeted AIM shares in her maiden budget, where she removed the inheritance tax exemption and reduced tax relief to 50 per cent. This effectively set the rate at 20 per cent with it set to kick in from April 2026.
But in a leaked memo obtained by The Telegraph, Deputy Prime Minister Angela Rayner has urged the Chancellor to go further.
Rayner proposed the ditching of inheritance relief on AIM shares altogether and closing of the commercial property stamp duty loophole.
Aberdeen said it backed the intentions of the Mansion House Accord, which includes AIM in its list of qualifying assets.
This targets an increased demand for AIM shares through grouping them in with the government’s push to get more pension and institutional capital flowing into smaller, fast-growing UK businesses.
Glennie said: “We support the sentiment of the Mansion House Compact in trying to encourage more pension money to go into UK smaller companies.
“But expanding the compact to include AIM-listed stocks will be meaningless if the AIM market shrinks to the point where it is uninvestable for institutions.”