The number of companies graduating from AIM to the London Stock Exchange’s Main Market is at its highest level for nearly a decade.
According to international law firm Pinsent Masons, six companies transferred from AIM in the last 12 months, versus two the year before.
The increase reflects a combination of recent regulatory changes that have reduced the cost and complexity of a Main Market listing, alongside a growing recognition among AIM companies that moving to the Main Market is now a far more accessible step, it said.
Young’s the brewery has recently announced it will move from AIM to the Main Market and other recent examples include Brooks Macdonald, which moved to the Main Market after 10 years on AIM. The company said the move was intended to enhance its corporate profile and attract a broader investor base.
Nicholas Holmes, Partner at Pinsent Masons and Head of the firm’s Equity Capital Markets practice, said:
“The increase in transfers is an early vindication of the FCA’s recent listing reforms and shows that companies are beginning to respond. We expect the trend to continue.
“The Main Market has always carried greater prestige. What has changed is that recent reforms have reduced some of the regulatory burdens associated with listing, making a move from AIM a more straightforward exercise for many companies.
“The regulatory gap between listing on AIM or the Main Market has narrowed, which is inevitably influencing how companies assess their listing options.
“With AIM reviewing its rules, the market will be watching closely to see whether those changes can attract and retain more businesses on AIM.”
Nicholas said that companies are keen to move from AIM to the Main Market as that will allow a much broader pool of institutional investors to invest in them. Most of the largest investment funds still have mandates that specify that they can only invest in Main Market companies and cannot invest in AIM shares.
Moving to the Main Market also gives companies the opportunity to be included in the most high-profile FTSE indices, which means that many index tracking funds will have to invest in them.
As well as improving liquidity a move to the Main Market should also give a boost to the valuation of an AIM company.
Nicholas said:
“Ultimately, these transfers reflect a healthy pipeline within London’s equity markets. AIM is supporting growing companies, while the Main Market is attracting businesses ready for their next phase of their growth.”
