![]() The accessibility and success of AIM means investors have an eclectic choice of stocks and sectors to pick from. Investors that had backed Nigerian oil producer Afren are still fighting claims in court today after the firm collapsed under questionable circumstances back in 2015. Langbar International, a cash shell that joined AIM in 2003, saw shares jump from 10p to £10 just on the announcement of a new chief executive officer (CEO) being appointed but, just two years later, that same CEO was jailed for losing £370 million that had been stashed somewhere in Brazil. Winning or losing one contract can make or break many firms, and it is common to see companies completely revamp their strategies. Plus, volatility is much higher than larger stocks because AIM companies can be very sensitive to the slightest development. It is important to stress that not all companies are successful and that many fail – often in spectacular fashion. Today, GVC – the owner of Ladbrokes Coral - is a member of the FTSE 250 generating almost £3 billion in annual revenue. For example, investors could pick up GVC shares for less than 90p each back in 2007, when it was just launching its first sportsbook, but that had soared to £5 days after it joined the Main Market in early 2016. Many highly successful companies and widely recognised names began their lives as public companies by listing on AIM before moving on to a traditional listing: Domino's Pizza Group, insurance provider Hiscox, self-storage firm Big Yellow Group and bookmaker GVC Holdings, to name a few. The attractiveness of the AIM market is the ability to invest in companies early on to help build the value of both the company and your investment over the longer term. Share prices can move by double digit percentages in a single day and it is not uncommon for a stock to pop higher or lower on a one announcement. In a nutshell, AIM stocks offer both higher risk and higher reward for investors. ![]() Others get bought out by peers or are taken back under private control. Most businesses that list on AIM end up leaving for one reason or the other - some grow and take a step up to a bigger listing (such as on the Main Market) while some fail and collapse. Today, there are over 880 stocks listed on AIM with a combined value of £94.7 billion. However, while the regulatory regime is strict, it is designed to make it easy for new businesses to float on AIM it does not require a business to be of a particular size (as is the case elsewhere), but instead requires a company to have a three-year operating history and the ability to demonstrate its worth. It also brings companies under a recognised regulatory and compliance framework that sets the standards for listed companies, which gives them higher recognition among investors and important institutions like banks and foreign lenders. Almost 795,000 trades were made on AIM-listed companies in September alone, trading 43.8 billion shares with a value of over £4.3 billion. The majority of funds raised on AIM is by companies that have already listed, demonstrating that firms are able to tap into vital liquidity even after they have conducted their IPO. The market has proven its ability to provide the vital funding needed to nurture small businesses. ![]() The peak year for IPOs was in 2005 when nearly 400 new companies joined the market, but it has remained below 100 per year ever since the financial crisis. In 2018, 52 new companies joined AIM and raised £1.6 billion, with existing companies raising a further £3.9 billion. Still, seven companies have joined the market in the first nine months of 2019, raising over £371 million, while existing listings have raised a further £2.36 billion. The number of AIM initial public offerings (IPOs) has been in decline over the last two years. ![]() Learn more about investing in the AIM market The main reason businesses choose to go public on AIM is because they need capital to grow, and sourcing other finance can be difficult. 'AIM is the most successful growth market in the world' – LSE.ĪIM is designed for small and medium sized businesses that wish to list their company on a stock exchange but are not yet ready for a full traditional listing. ![]()
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