AIM is in danger of becoming irrelevant according to wealth platform AJ Bell after listings on the London junior market fell to their lowest total since 2021.
The number of companies on AIM worth more than a billion pounds has also dropped to its lowest for nine years, AJ Bell added.
“A mere six stocks were worth more than £1 billion at the end of 2024 compared with 30 at the end of 2021,” says Dan Coatsworth, investment analyst at AJ Bell.
Coatsworth added that “this perilous situation” coincides with the lowest level of listing since the end of 2001 at 688 stocks against nearly 1,700 seen at its peak in 2007.
Last year also saw the second lowest-ever number of IPOs since AIM launched 30 years ago in 1995, he added.
“AIM needs a reboot if it is to stay relevant for another 30 years.
“The London Stock Exchange, FCA and government need to consider more incentives for companies to list on AIM and ways to attract a broader pool of investors to want to own the shares.
Stepping up from AIM to the main market
Since its inception 25 years ago, some 128 companies have moved from AIM to the LSE's main market, including Entain (as GVC Holdings), Melrose Industries and Unite, all of which are now in the FTSE 100, while Breedon, Genus and Domino’s Pizza are FTSE 250 members.
Looking at who could be next, the analyst pointed to Jet2 PLC (AIM:JET2), valued at £3.3 billion, would be on the cusp of the FTSE 100 if it shifted to the top stock exchange.
“Jet2 is a perfect example of a business which has been transformed during its time on AIM," said Coatsworth.
“Starting life as a company transporting flowers, over the years it morphed into a broader cargo business by air and road, but the real turning point was the 2003 launch of a scheduled passenger airline. Its leisure activities have been a runaway success.”
Below £1 billion, AIM contenders for transferring to the LSE's official list include acquisition-driven engineering services provider Renew Holdings (AIM:RNWH) and construction group SigmaRoc PLC (AIM:SRC), says Coatsworth.
“One of the key reasons why companies have historically chosen AIM over the main market is the ability to make acquisitions without a shareholder vote, excepting reverse takeovers.
“Changes to the listing rules in 2024 have put the main market on a more level playing field with AIM in this regard.”