Alternative Investment Market (AIM) is a sub-market (exchange-regulated) under the London Stock Exchange (LSE) and the same has been adorned as the most successful growth market on LSE, which is recognised globally. As of now, over 3,600 companies worldwide have joined the Alternative Investment Market to raise growth capital. Going back in time, AIM was launched in 1995 with the objective to assist smaller and growing companies to raise the capital for their strategic initiatives and expansion plans.
Diversified range of companies including early stage, venture capital backed companies joined the alternative investment market to float shares for easy access to raise growth capital, and with more relaxed regulatory norms as compared to the main market.
Companies that pursue Alternative Investment Market through an initial public offering (IPO) route, generally intend to raise growth capital in between £1 million and £50 million. However, some companies have raised capital that exceeded £100 million and have the current market capitalization of over £1 billion. Examples of these include – Burford Capital, Fevertree Drinks, ASOS, Abcam, Boohoo Group, RWS Holdings, etc.
Many Companies Listed on AIM Also Gain Enough Capital Wherein a Sufficient Portion can be Directed Towards Dividends and This is Another Attractive Feature for Income Investors.
Running a public company has some downside risks too. The company must adhere to the compliance of the market regulators and corporate governance norms to meet the shareholders’ expectations. Any negative news or contraction in the business performance can adversely impact the share price performance and can impact the investors’ sentiments. Also, AIM typically offers less liquidity and inadequate information about the company due to relaxed norms.
Alternative Investment Market route is more speculative as compared to other exchanges.
While AIM market offers significant volatility and riskier investment proposition, it is many-a-times more attractive due to associated tax incentives.