Reflecting on 25 Years of Aim

VIDEO: On the Alternative Investment Market's 25th anniversary, Gresham House's Ken Wotton looks at some of Aim's biggest success stories and why it's dubbed a "Wild West" for investors

Holly Black 19 June, 2020 | 10:07AM
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Holly Black: Welcome to Morningstar. I'm Holly Black. With me is Ken Wotton. He is Manager of the Gresham House UK Micro Cap Fund. Hello.

Ken Wotton: Hi. Nice to be here.

Black: So, we're celebrating today. It's the 25th anniversary this week of the Alternative Investment Market, more commonly known as Aim. What is this stock market, Ken?

Wotton: Okay. So, Aim is the junior market for the London Stock Exchange which means it's the market focused on trying to attract smaller lesser growth businesses because they have slightly lighter touch regulatory framework and companies can raise capital.

Black: And why does a company list on Aim rather than on the main London Stock Exchange?

Wotton: I think initially when – in the earlier days of Aim it was viewed as stepping stone towards the main market, although these days actually a lot of larger companies just stick with Aim. I think main attractions are that the regulatory environment is – it's slightly lighter touch. It doesn't mean it's not a regulated market. But it just means that the companies find it easier in terms of the paperwork and the regulatory burden and the cost to raise capital from investors to fund their growth plans.

Black: But it has got this reputation as the sort of riskier cowboy of market. Where has that come from? Is it justified at all?

Wotton: I think that reputation is a little bit outdated now. I think if you went back 10 or 15 years, there were a lot of headlines about Aim and I think there was one in the US about Aim being casino. I think those days are really gone. The number of companies there listed on Aim has reduced materially in that period since then. But the quality of the companies has also increased materially which I think is a good thing. Again, part of the reputation is driven by a certain body of investment areas being prominent, so the dotcom in the early part of the century and then also some of the mining and the oil exploration companies that probably were a bit too high risk and the investment case was quite binary and people lost money. But there are some high-quality companies on Aim that really used the market quite well.

Black: And I think some investors might think this is the place where you sort of dabble in penny stocks but there are some absolutely huge companies on this market. Do you want to talk us through some of the biggest success stories we've seen on Aim?

Wotton: Yeah. So, I mean, there have been some big success stories on AIM. There are companies like Abcam in healthcare; Asos, the online retailer; Boohoo, the fashion retail business; and Fever-Tree, the tonic water business. Obviously, household names have been great successes and now very big companies. Also, Aim has produced a whole host of success stories that are maybe a bit less above the radar but have used the market and the access to capital rates to very successfully grown their businesses. So, a couple of examples would be Mattioli Woods which is a wealth management business, pensions advisor, which has been a real success story over the past 15 years or so that it's been listed and it's used the market periodically to access capital from investors to make acquisitions and it's now a leading player in that smaller end of the wealth management space.

Black: And I mean, reflecting on 25 years of Aim I sort of wonder if in today's world where we are constantly talking about disruptors and entrepreneurial businesses, whether actually this market is more relevant than ever?

Wotton: I think it's absolutely relevant. I think as a flexible market where all sorts of different companies can find a strong pool of institutional capital to back their growth plan that I think it really is a viable proposition for a lot of businesses and an alternative to private equity which clearly has become more prominent over the last few years. And it doesn't need to be seen any more as a sort of correlation of the London Stock Exchange. I think some of those big names that we talked about there, I think prove that big companies can use AIM very effectively and can stay there indefinitely.

Black: Ken, thank you so much for your time. For Morningstar, I'm Holly Black.

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Holly Black  is Senior Editor,


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