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Alternative Investment Market

From Wikipedia, the free encyclopedia

AIM
TypeStock exchange
LocationLondon, England, UK
Founded19 June 1995
OwnerLondon Stock Exchange Group
Key peopleMarcus Stuttard (Head of UK Primary Markets and AIM)[1]
CurrencyGBP, US$
No. of listings821[2]
WebsiteAIM homepage on London Stock Exchange website

AIM (formerly the Alternative Investment Market) is a sub-market of the London Stock Exchange that was launched on 19 June 1995 as a replacement to the previous Unlisted Securities Market (USM) that had been in operation since 1980. It allows companies that are smaller, less-developed, or want/need a more flexible approach to governance to float shares with a more flexible regulatory system than is applicable on the main market.

At launch, AIM comprised only 10 companies valued collectively at £82.2 million. As at May 2021, 821 companies comprised the sub-market, with an average market cap of £80 million per listing.[2] AIM has also started to become an international exchange, often due to its low regulatory burden, especially in relation to the US Sarbanes–Oxley Act (though only a quarter of AIM-listed companies would qualify to be listed on a US stock exchange even prior to passage of the Sarbanes–Oxley Act).[3] By December 2005, over 270 foreign companies had been admitted to AIM.

The FTSE Group maintains three indices for measuring AIM, which are the FTSE AIM UK 50 Index, FTSE AIM 100 Index, and FTSE AIM All-Share Index.

Regulatory model

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AIM is an exchange regulated venue featuring an array of principles-based rules for publicly held companies. AIM's regulatory model is based on a comply-or-explain option that lets companies that are floated on AIM either comply with AIM's relatively few rules, or explain why it has decided not to comply with them.

Nominated Advisers (Nomads)

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Aside from granting leeway in regard to regulatory compliance, the Exchange also mandates continuous oversight and advice by the issuer's underwriter, referred to as a Nominated Adviser (Nomad). The role of Nomads is central to AIM's regulatory model, as these entities play the role of gatekeepers, advisers and regulators of AIM companies. In advising each firm as to which rules should be complied with and the manner in which existing requirements should be met, Nomads provide the essential service of allowing firms to abide by tailor-made regulation, reducing regulatory costs in the process. Theoretically, Nomads are liable for damages from tolerating misdemeanors on behalf of their supervised companies, including the loss of reputational capital. However, this heavy reliance on Nomads has been criticised as creating a conflict of interest, since Nomads receive fees from the companies they purportedly supervise while, in practice, managing to avoid liability for market misconduct.

In 2006, the London Stock Exchange launched a review of Nomad activities, resulting in a regulatory "handbook" for Nomads published by the Financial Services Authority in 2007.[4][5]

Self-regulation

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AIM is an unregulated market segment, therefore it escapes most of the mandatory provisions contained in European Union directives – as implemented in the UK – and other rules applicable to companies listed in the LSE. AIM believes self-regulation is pivotal to AIM's low regulatory burden: companies seeking an AIM listing are not subject to significant admission requirements; after admission is granted, firms must comply with ongoing obligations which are comparatively lower to the ones that govern the operation of larger exchanges; and certain corporate governance provisions are not mandatory for AIM companies. Therefore, AIM-listed companies are often subject to manipulation by institutional investors. AIM-listed companies usually are only required to adhere to the corporate governance requirements of their home jurisdiction, which, as a practical matter, vary widely.[5]

However, the regulatory requirements are more onerous than for private companies and AIM listed plcs are required to prepare audited annual accounts under IFRS.[6]

Investor base

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Another important element of AIM's model is the composition of its investor base. Although AIM-listed companies are not start-ups, most are small and potentially more risky than a FTSE listing. This may prove to be hazardous for unsophisticated investors who lack both the knowledge and resources to conduct proper inquiries into a firm's prospects and activities, or even larger investors which lack strong internal control and risk management requirements. As a consequence, AIM's investor base is largely composed of institutional investors and wealthy individuals.[5]

Market capitalisation

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The following table lists the 10 biggest AIM companies on 31 May 2021.[2] [needs update]

Rank Company Market Cap (GBP)
1 ASOS PLC 4.869 billion
2 Boohoo Group PLC 4.035 billion
3 Abcam PLC 3.211 billion
4 Hutchmed (China) Ltd 3.060 billion
5 Fevertree Drinks PLC 2.977 billion
6 Jet2 PLC 2.897 billion
7 RWS Holdings PLC 2.487 billion
8 ITM Power PLC 2.166 billion
9 Ceres Power Holdings PLC 2.070 billion
10 Keywords Studios PLC 1.967 billion

Companies

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The following table lists the top 100 AIM companies by market capitalisation on 25 April 2020.[7][needs update]

List of all Alternative Investment Market constituents[8]
Company Ticker
AB Dynamics plc ABDP
Abcam plc ABC
Advanced Medical Solutions Group plc AMS
Alliance Pharma Plc APH
Alpha Financial Markets Consulting Plc AFM
Alpha Group International plc ALPH
Andrews Sykes Group plc ASY
Applegreen plc APGN
ASOS plc ASC
Atalaya Mining plc ATYM
Benchmark Holdings plc BMK
Blue Prism plc PRSM
Boohoo Group plc BOO
Breedon Group plc BREE
Brooks Macdonald Group[9] BRK
Burford Capital Ltd BUR
Bushveld Minerals Ltd BMN
Camellia CAM
Caretech Holdings plc CTH
Central Asia Metals CAML
Ceres Power Holdings CWR
Clinigen Group plc CLIN
Codemasters Group Holdings Limited CDM
Cohort plc CHRT
Craneware plc CRW
Creo Medical Group Plc CREO
CVS Group plc CVSG
Dart Group plc DTG
Diversified Gas & Oil Plc DGOC
dotDigital Group plc DOTD
Draper Esprit plc GROW
Eddie Stobart Logistics plc ESL
Emis Group Plc EMIS
Fevertree Drinks plc FEVR
Focusrite plc TUNE
Frontier Developments plc FDEV
Gamma Communications Ltd GAMA
Gateley Holdings plc GTLY
GB Group plc GBG
GlobalData plc DATA
Gooch & Housego GHH
Greencoat Renewables plc GRP
Highland Gold Mining HGM
Horizon Discovery Group plc HZD
Hotel Chocolat Group plc HOTC
Hurricane Energy plc HUR
Hutchison China Meditech HCM
Ideagen Plc IDEA
IG Design Group plc IGR
IMImobile plc IMO
Impax Asset Management Group Plc IPX
Iomart Group IOM
IQE plc IQE
ITM Power plc ITM
Jadestone Energy Inc JSE
James Halstead plc JHD
Johnson Service Group plc JSG
Judges Scientific plc JDG
Kape Technologies Plc KAPE
Keywords Studios plc KWS
Knights Group Hldgs KGH
Learning Technologies Group plc LTG
Loungers LGRS
M P Evans Group Plc MPE
Marlowe plc MRL
Mattioli Woods Plc MTW
Midwich Group plc MIDW
Mortgage Advice Bureau (Holdings) Ltd MAB1
Next Fifteen Communications Group NFC
Nichols plc NICL
Numis Corporation NUM
Pan African Resources plc PAF
Pebble Group plc PEBB
Polar Capital Holdings Plc POLR
Premier Miton Group plc PMI
PurpleBricks Group plc PURP
Randall & Quilter Investment Holdings Ltd RQIH
Renew Holdings Plc RNWH
Restore Plc RST
RWS Holdings plc RWS
Scapa Group plc SCPA
Secure Income REIT plc SIR
Serica Energy Plc SQZ
Silence Therapeutics plc SLN
Smart Metering Systems plc SMS
Strix Group plc KETL
Sumo Group SUMO
Team17 Group Plc TM17
Telit Communications Plc TCM
Thorpe (F.W) plc TFW
Tracsis plc TRCS
Nexxen NEXN
Uniphar plc UPR
Victoria plc VCP
Wandisco plc WAND
Warehouse REIT plc WHR
Watkin Jones plc WJG
YouGov Plc YOU
Young & Co's Brewery Plc (A shares) YNGA
Young & Co's Brewery Plc (non-voting shares) YNGN

Criticism

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"Casino" environment

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In March 2007, U.S. securities regulator Roel Campos suggested that AIM's rules for share trading have created a market like a casino. Campos reportedly said: "I'm concerned that 30% of issuers that list on AIM are gone in a year. That feels like a casino to me and I believe that investors will treat it as such."[10] The comment resulted in several angry retorts, including one from the London Stock Exchange, which controls AIM, pointing out that the number of companies that go into liquidation or administration in a year is actually fewer than 2%.[10]

AIM has since issued new rules requiring that listed companies maintain a website.[11]

The calibre of participants in the market has also been criticised by fund manager John Hempton of Bronte Capital Management.[12]

Crown Corporation / Langbar International fraud

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In 2003 Langbar international was admitted to the AIM.

In 2011 Langbar's now former CEO, Stuart Pearson was found guilty of "three counts of making misleading statements by falsely claiming in stock market announcements that the company had assets held by Banco do Brasil and that some assets were being transferred to the company", jailed for 12 months and banned for being a company director for five years.[13]

This £365 million ($750m) share fraud was investigated by the Serious Fraud Office[14][15] and the City of London Police when it was discovered in November 2005 that Langbar had none of the assets it declared at listing. This was due in part because the Nomad (Nominated Adviser) failed to carry out due diligence. Also, the Exchange did not ensure that the AIM rules had been complied with. AIM changed the rules for Nomads in 2006.[16][17][18] On 19 October 2007 they fined Nabarro Wells £250,000 ($512,500)[19] and publicly censured them for breaches of the AIM rules.[20][21]

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In March 2007 The Daily Telegraph noticed a tendency to use listing vehicles incorporated in offshore financial centres prior to floating on AIM. Some 35% of the companies floated on AIM during 2006 were from OFCs, of which the majority came from the Channel Islands or the British Virgin Islands.[22]

On 29 January 2009 it was announced that AIM is to form the basis of an Asian-orientated growth or incubator market called 'Tokyo AIM', which will be run as a joint venture between the Tokyo Stock Exchange and LSE. Tokyo AIM will replicate AIM's system of oversight by NOMADs, with 'J-Nomads' being "selected and approved by TOKYO AIM ... to assess companies' suitability for the market".[23] In July 2012, TOKYO AIM changed its name to TOKYO PRO Market, and since then Tokyo Stock Exchange, Inc. has continued to operate TOKYO AIM based on the original market concept.[24]

Dividends

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As of 1 October 2018, just under a third of AIM-listed companies have paid shareholders a dividend within their most recent financial year.[needs update] The largest companies to have paid dividends include: Fevertree Drinks PLC (FEVR), Burford Capital Ltd (BUR), and Abcam PLC (ABC). The smallest companies to have paid dividends include: Holders Technology PLC (HDT), Aeorema Communications PLC (AEO), and Stilo International (STL).[25]

See also

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References

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  1. ^ LSE AIM Contact page 3 Jun 2021 Archived 20 June 2009 at the Wayback Machine
  2. ^ a b c "Reports: Issuer List, May 2021" (xlsx). London Stock Exchange. May 2021.
  3. ^ Doidge, Karolyi and Stulz "Has New York Become Less Competitive in Global Markets? Evaluating Foreign Listing Choices over Time", Papers.ssrn.com, 25 April 2007, SSRN 982193
  4. ^ Warwick-Ching, Lucy (29 December 2007). "Advisers walk away from smallest fry". Financial Times.
  5. ^ a b c Mendoza, Jose Miguel (October 2007). "Securities regulation in low-tier listing venues: The rise of the Alternative Investment Market". Fordham Journal of Corporate & Financial Law (abstract). XIII (1). New York. SSRN 1004548.
  6. ^ "Rule 19 of AIM Rules for Companies (2010)" (PDF). London Stock Exchange. Archived (PDF) from the original on 2 January 2013. Retrieved 15 August 2013.
  7. ^ "FTSE AIM 100: Market overview". Hargreaves Lansdown. 25 April 2020. Retrieved 25 April 2020.
  8. ^ AIM Quoted Company Search|https://www.aimlisting.co.uk/aim-company-list/
  9. ^ "BROOKS MACDONALD GROUP PLC overview - Find and update company information - GOV.UK". find-and-update.company-information.service.gov.uk. Retrieved 28 January 2023.
  10. ^ a b Jill Treanor (9 March 2007). "Treanor, Jill "City hits out over US 'casino' jibe at Aim" The Guardian 10 March 2007". London: Business.guardian.co.uk. Archived from the original on 14 March 2007. Retrieved 20 November 2011.
  11. ^ "LSE AIM Rule 26". Aimlisting.co.uk. Archived from the original on 12 November 2011. Retrieved 20 November 2011.
  12. ^ Frost, James (November 2016). "The iconoclast". SmartInvestor. The Australian Financial Review. p. 9. And then there are certain places with a preponderance of bad people. Stockbrokers from Long Island, mining promoters in Perth or Vancouver, anything on the AIM boards in the UK.
  13. ^ Croft and Binham, Jane and Caroline (14 November 2011). "Ex-chief at Langbar jailed". www.ft.com. Archived from the original on 19 May 2018. Retrieved 14 August 2021.
  14. ^ Simon Bowers (25 November 2005). "Fraud inquiry starts into shell firm's missing millions". The Guardian. UK. Archived from the original on 30 September 2013. Retrieved 20 November 2011.
  15. ^ Bowers, Simon (30 November 2005). "Fraud office launches inquiry into Langbar". The Guardian. Retrieved 24 August 2018.
  16. ^ "Sharewatch: LSE takes AIM" Archived 12 June 2011 at the Wayback Machine. The Sunday Times, 2 July 2006
  17. ^ "Inside the City: Rogue nomads in the firing line" Archived 12 June 2011 at the Wayback Machine The Sunday Times, 2 July 2006
  18. ^ Essen, Yvette (3 October 2006). "LSE takes aim at nomads to quell concerns". The Daily Telegraph. UK. Archived from the original on 13 March 2014. Retrieved 20 November 2011.
  19. ^ "Historic Currency Conversion". Discount-currency-exchange.com. 19 October 2007. Archived from the original on 11 May 2008. Retrieved 20 November 2011.
  20. ^ ""Nomad strayed from market rules" Financial Times 19 October 2007". Financial Times. 19 October 2007. Archived from the original on 29 June 2012. Retrieved 20 November 2011.
  21. ^ LSE hits Nabarro Wells with £250,000 fine over AIM checks" Archived 12 June 2011 at the Wayback Machine The Times 20 October 2007
  22. ^ Essen, Yvette (12 March 2007). "Aim market: Offshore attractions for the 'sophisticated' investor". The Daily Telegraph. UK. Archived from the original on 5 August 2011. Retrieved 20 November 2011.
  23. ^ "Tokyo Stock Exchange and London Stock Exchange publish rulebook for public comment; name new growth market "TOKYO AIM"". London Stock Exchange. 29 January 2009. Archived from the original on 29 October 2011. Retrieved 20 November 2011.
  24. ^ "Tokyo Stock Exchange changed its name from AIM to PRO Market". Japan Stock Exchange Group. July 2012.
  25. ^ "Dividend Yield Opportunities On AIM (2018)". AIM-Watch. 1 October 2018. Retrieved 16 December 2018.
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