There are an increasing number of AIM companies deciding their future is better served on the Main Market of the London Stock Exchange. The more hyperbolic commentators view this ‘exodus’ as the beginning of the end for AIM.
We believe this is well wide of the mark; the second order effect of such moves should actually be long-term beneficial to AIM’s smaller sized companies where we focus.
The below are AIM companies that have either recently moved to the Main Market or are in the process of doing so:
Breedon Group (£1.3bn capitalisation): May 2023
Alpha Group (£900m): May 2024
Gamma Communications (£1.3bn): pending
Brooks Macdonald (£244m): pending
Mortgage Advice Bureau (£493m): pending
GlobalData (£1.6bn): pending
Total market cap: £5.8bn
With the exception of Brooks Macdonald, the above are all comfortably mid-cap sized stocks. Indeed, once a company grows to a certain scale the natural next step is a move up. This makes most sense where they will go straight into the FTSE 250 (>£480m mkt cap) as there they will attract the vast inflows of tracker funds.
AIM IHT investors must sell shares before the company makes the move to the Main Market to preserve Business Relief. As more of the larger AIM companies depart, this provides reinvestment capital for the smaller-sized companies, reducing their cost of capital and aiding their future growth aspirations.
In a market starved of capital, especially for smaller sized companies, this dynamic is strongly welcomed by us. Our peers with much larger funds may take a different view given their investable universe is shrinking rapidly. We prefer to seek the best companies, not (merely) the biggest.
