Should AIM Be Abolished?

As politicians and regulators fret over how best to revive UK markets one new report suggests AIM should simply be rolled into the Main Market.

The new government’s focus on growth, highlighted at an investment summit earlier this week in which the Prime Minister appealed to global investors to unleash the ‘shock and awe of investment’, and vowed to ‘rip up’ Britain’s bureaucracy, will need to encompass the UK’s stuttering capital markets.

Ministers have confirmed plans to build on the regulatory reforms of the previous administration, Chancellor Rachel Reeves saying that ‘the financial services sector is central to the UK economy, and at the heart of this government’s growth mission’.

Readers will not need reminding that London’s once world-leading exchanges are falling behind their peers, battling with an outflow of investment, fewer IPOs, and institutional risk-aversion within the UK’s pension and insurance systems.

It could be different. Of the more than 250 European start-ups generating $100m to $500m in revenue, almost half are based in the UK. Britain has a world class scientific research base, and a strong record of innovation in blooming sectors such as AI, fintech and biotech. But those companies are not choosing to list on UK markets, which are now increasingly dependent on legacy financial services and natural resources firms.

Regulators and politicians have been on the case. The most significant overhaul of rules for London-listed companies in three decades came into effect in July, including contested reforms to allow founders and venture capital firms to introduce dual-class share structures allowing them to make more decisions without shareholder votes. Further changes are likely to follow, discussed by Master Investor last month, such as the consolidation of UK pension schemes to facilitate investment in infrastructure, equities and other riskier assets.