The strength of the market surprised even Marcus Stuttard, head of Aim and UK primary markets at the London Stock Exchange (LSE). Aim’s performance shows it has been “remarkably resilient” and “investors have been looking to Aim for performance and access to growth” over the pandemic period. At the same time, strong primary and secondary market issuance shows both companies and investors, including plenty of non-UK companies, remain attracted to London's junior market. “52 per cent of the total capital raised on European growth markets so far this year has been raised on Aim, demonstrating the depth and maturity of the market," notes Stuttard.
It has been a very active year for IPOs. Major floats include Revolution Beauty (REVB), which raised £300m in July, while the third quarter of 2021 was record-breaking: the period saw 19 Aim floats raise £1.1bn, against just £76m in the same three months in 2020. This reflected improved market confidence in the economic outlook, as the success of the vaccine rollout and removal of the most stringent pandemic restrictions allowed the resumption of relatively normal trading conditions for businesses.
While the volume of IPOs suggests Aim is succeeding in attracting high-growth capital to the market, this doesn’t tell the whole story. Extremely loose monetary policy from governments around the world since the pandemic hit has diverted even more cash into the market, driving up stock values. The number of flotations is another sign of this. Overvaluations, as demonstrated by several notable stocks that have plunged shortly after listing, remain a perennial issue for a bourse full of high-growth, big-promise stories.
Could this soon change? The competitiveness and regulatory frameworks of the London exchanges has been much discussed in the past year. Lord Hill’s listing review set out several recommendations, including an overhaul of the prospectus regime. Stuttard says the market has a “tried and tested regulatory model that has stood the test of time” but the LSE will support prospectus reform that benefits retail investors. Dr Paul Jourdan, chief executive of Amati Global Investors, thinks new stock exchange entrants could help to keep costs down and remove monopolistic tendencies. “The best way of improving Aim would be competition," he argues, and referenced subscription-based Acquis Exchange as one rival that could gather steam in the coming years.
A higher tax environment could also be seen as a risk to the market. It is not outlandish to think that the tax privileges that Aim enjoys – such as entrepreneurs’ relief, business relief (BR) and VCT exemptions – could be threatened in the future. But while investors and managers should keep this in mind, unpicking a tax relief such as BR, designed to shelter businesses through the succession process, would not be a straightforward task.
Aim has outperformed expectations over the past 18 months. Whether this can be maintained is another question. Fundamentals remain strong and the IPO pipeline looks robust, but high-growth stocks are just as affected by the inflation and labour shortages that currently dog larger corporates. These themes, and plenty more besides, are wrapped in the 50 briefings that follow.
In the second part of this feature, which will appear in in a fortnight's time in the issue dated 19 November, we'll be assessing the strengths and weaknesses of the top 50 largest Aim constituents.
| Aim 100 Part 1 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Number | Name | Code | Market Cap (£m) | Price (£) | Fwd PE | 1-yr simple return (%) | 1-yr total return (%) | Sector | 2020 ranking |
| 100 | Novacyt | NCYT | 177.5 | 2.513 | 6.1 | -77.2 | -77.2 | Biotechnology | - |
| 99 | Proton Motor Power Systems | PPS | 340.7 | 0.44 | - | -23.5 | -23.5 | Electrical Products | - |
| 98 | Frp Advisory | FRP | 285.0 | 1.27 | 17.8 | 22.7 | 27.0 | Miscellaneous Commercial Services | - |
| 97 | Pan African Resources | PAF | 281.6 | 0.1736 | 5.1 | -13.2 | -10.4 | Precious Metals | 74 |
| 96 | Creo Medical | CREO | 298.5 | 1.65 | - | 7.9 | 7.9 | Medical Specialties | 81 |
| 95 | Avacta Group | AVCT | 305.2 | 1.224 | - | -25.8 | -25.8 | Miscellaneous Commercial Services | - |
| 94 | Idox | IDOX | 315.6 | 0.714 | 34.5 | 38.9 | 39.6 | Packaged Software | - |
| 93 | Gooch & Housego | GHH | 313.0 | 12.5 | 33.3 | 13.9 | 14.3 | Electronic Components | 79 |
| 92 | Knights Group | KGH | 325.5 | 3.9 | 18.6 | -2.5 | -2.5 | Miscellaneous Commercial Services | 55 |
| 91 | Jadestone Energy | JSE | 403.6 | 0.87 | 27.8 | 74.0 | 77.0 | Integrated Oil | 85 |
| 90 | Seeing Machines | SEE | 368.1 | 0.097 | - | 114.4 | 114.4 | Electronic Equipment/Instruments | - |
| 89 | Ekf Diagnostics | EKF | 373.9 | 0.806 | 22.3 | 24.0 | 25.7 | Medical Specialties | - |
| 88 | IQE | IQE | 364.6 | 0.4545 | 167.8 | -15.8 | -15.8 | Semiconductors | 58 |
| 87 | Brooks Macdonald | BRK | 408.9 | 26.25 | 15.0 | 61.3 | 65.8 | Investment Managers | 68 |
| 86 | AFC Energy | AFC | 440.7 | 0.6 | - | 246.8 | 246.8 | Electrical Products | - |
| 85 | Alpha Financial | AFM | 389.7 | 3.48 | 21.0 | 64.9 | 68.7 | Miscellaneous Commercial Services | 96 |
| 84 | Numis Corporation | NUM | 354.5 | 3.41 | 7.5 | 15.6 | 19.6 | Investment Banks/Brokers | 78 |
| 83 | Jubilee Metals Group | JLP | 407.0 | 0.1675 | - | 146.3 | 146.3 | Precious Metals | - |
| 82 | Inspecs Group | SPEC | 395.0 | 3.9 | 32.8 | 119.7 | 119.7 | Financial Conglomerates | - |
| 81 | AB Dynamics | ABDP | 423.0 | 18.7 | 48.0 | -13.0 | -12.8 | Auto Parts: OEM | 65 |
| 80 | Central Asia Metals | CAML | 448.9 | 2.55 | 7.4 | 49.8 | 64.9 | Other Metals/Minerals | 71 |
| 79 | Benchmark Holdings | BMK | 414.0 | 0.6175 | - | 28.6 | 28.6 | Pharmaceuticals: Major | 83 |
| 78 | Atalaya Mining | ATYM | 539.0 | 3.9 | 5.3 | 119.1 | 119.1 | Precious Metals | 95 |
| 77 | Judges Scientific | JDG | 491.4 | 77.8 | 35.3 | 49.6 | 50.9 | Electronic Equipment/Instruments | 57 |
| 76 | MP Evans | MPE | 470.4 | 8.6 | 12.0 | 56.4 | 61.8 | Agricultural Commodities/Milling | 62 |
| 75 | Revolution Beauty | REVB | 374.8 | 1.21 | 48.1 | - | - | Financial Conglomerates | - |
| 74 | IG Design Group | IGR | 270.9 | 2.8 | 11.2 | -36.2 | -35.2 | Consumer Sundries | 30 |
| 73 | Randall & Quilter | RQIH | 502.3 | 1.825 | 18.3 | 5.8 | 9.4 | Specialty Insurance | 59 |
| 72 | Silence Therapeutics | SLN | 449.8 | 5.01 | - | 30.1 | 30.1 | Miscellaneous Commercial Services | 41 |
| 71 | Ienergizer | IBPO | 530.5 | 2.79 | - | 30.5 | 36.8 | Data Processing Services | - |
| 70 | Renalytix | RENX | 640.1 | 8.86 | - | 92.6 | 92.6 | Packaged Software | - |
| 69 | Nichols | NICL | 426.5 | 11.55 | 28.0 | 14.4 | 15.9 | Beverages: Non-Alcoholic | 32 |
| 68 | Tinybuild | TBLD | 401.0 | 1.98 | 39.7 | - | - | Packaged Software | - |
| 67 | Hotel Chocolat | HOTC | 702.2 | 5.12 | 40.9 | 38.4 | 38.4 | Food: Specialty/Candy | 52 |
| 66 | FW Thorpe | TFW | 491.5 | 4.2 | - | 35.0 | 37.5 | Electrical Products | 54 |
| 65 | Young & Co | YNGA | 897.6 | 15.35 | 29.0 | 79.3 | 79.3 | Beverages: Alcoholic | 36 |
| 64 | Midwich Group | MIDW | 590.6 | 6.7 | 29.9 | 88.7 | 90.9 | Wholesale Distributors | 43 |
| 63 | Naked Wines | WINE | 499.4 | 6.8 | - | 41.1 | 41.1 | Beverages: Alcoholic | - |
| 62 | Serica Energy | SQZ | 639.8 | 2.385 | 5.0 | 122.9 | 129.0 | Oil Refining/Marketing | 77 |
| 61 | Amryt Pharma | AMYT | 503.9 | 1.59 | - | -22.8 | -22.8 | Pharmaceuticals: Major | - |
| 60 | Alliance Pharma | APH | 552.5 | 1.03 | 18.4 | 37.3 | 39.8 | Pharmaceuticals: Other | 47 |
| 59 | Urban Logistics Reit | SHED | 558.9 | 1.72 | 22.4 | 22.4 | 25.7 | Real Estate Investment Trusts | - |
| 58 | Boku | BOKU | 554.5 | 1.875 | 66.7 | 58.2 | 58.2 | Miscellaneous Commercial Services | - |
| 57 | Watkin Jones | WJG | 604.5 | 2.36 | 15.4 | 67.4 | 75.9 | Homebuilding | 38 |
| 56 | Advanced Medical Solutions | AMS | 702.1 | 3.26 | 34.7 | 45.5 | 46.4 | Medical Specialties | 28 |
| 55 | Renew Holdings | RNWH | 598.0 | 7.6 | 15.0 | 65.2 | 69.1 | Engineering & Construction | 50 |
| 54 | Greatland Gold | GGP | 697.8 | 0.176 | - | -27.4 | -27.4 | Precious Metals | - |
| 53 | Eurasia Mining | EUA | 610.7 | 0.214 | - | -28.1 | -28.1 | Metal Fabrication | - |
| 52 | Warehouse Reit | WHR | 696.8 | 1.64 | 21.9 | 51.9 | 58.9 | Real Estate Investment Trusts | 75 |
| 51 | Restore | RST | 651.9 | 4.77 | 22.1 | 47.2 | 47.9 | Other Transportation | 33 |
| Source: FactSet, LSE. Aim 100 ranking as of 23 Sep 2021, price data accurate as of 27 Oct | |||||||||
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