In June 1995 England had the driest summer in recorded history. Blackburn Rovers were the league champions and Barings Bank had collapsed just a few months earlier. One percent of the population had internet access. June 1995 also saw the launch of the Alternative Investment Market (AIM), which now bills itself as the world's most successful growth market.
AIM was launched with ten companies moving down from the main market, with a combined market value of under £100 million. By the end of the year a further 101 companies had joined raising, again, under £100 million. Today the AIM market has a combined market value of £75 billion, has raised in total some £92 billion from investors and has had over 3,600 companies admitted.
From being a predominately UK market it has developed over the early noughties, in particular, into being one with a decidedly international flavour, with almost 20 % of admitted companies being from outside these shores. The five largest companies currently on AIM each have a market capitalisation of over £1 billion – larger than many, many main list companies – although it is interesting to note that none of these business existed when the market was first launched. It is also fair to say that none of these businesses were capable of existing at the time, albeit one is an off shoot of a 19th century Hong, because the areas they work in rely on mass internet access, assets that were then in politically turbulent areas or which are pharmaceutical and bio-technology orientated in a way that couldn't have been conceived in 1995.
Although it is difficult to argue with AIM's success it hasn't all been plain sailing. Even this year there have been 24 admissions, four of which have been readmissions and one a transfer from the main market, whilst 53 companies have delisted, and none of those have transferred to the main market. The relative failure of AIM to be a consistent feeder of new main market companies is a drawback, but the continued retention of AIM status by successful companies does reflect the beneficial tax status that AIM shareholders enjoy and which has helped to give the market a degree of stability.
An American regulator famously described AIM as "a casino" in 2007. This was a decidedly unfair characterisation of this junior market – very few AIM companies have delisted through the medium of insolvency. AIM has already lived longer than its forebear, the Unlisted Securities Market, which lasted for 15 years, and has survived through a highly turbulent period. Communications have been revolutionised (viz the comment above about internet access), the corporate scandals which started with Enron and WorldCom still reverberate a decade and a half later (and other financial scandals still surprise and disappoint investors with Langbar standing out as AIM's contribution), whilst the world has been through the most serious global financial crisis since the Great Depression.
Reporting has changed too. In 1995 corporate governance (in a formal sense) was in its infancy, with the Cadbury code just three years old. Formal governance structures then rarely existed and transparency was something to do with new-fangled cling film. We accounted under old UK GAAP, not IFRS, with exotic accounting (to modern eyes), such as goodwill disappearing into reserves on creation. AIM rules now require the code of governance that companies are obliged to adopt to be specified on their websites and annual reports are now two to three times the size they were at the market's launch.
The names and activities of the companies on AIM maybe very different from those that started it off in 1995, but its resilience is to be admired.
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