The London Stock Exchange “may have missed a trick” when it comes to encouraging smaller companies to list on AIM by not developing crowd funding capabilities as a potential AIM feeder, Fundamental Asset Management’s Chris Boxall says.
There were 973 companies listed on AIM at the end of January with a total market value of £84.7bn, down from the 982 AIM-listed companies at the end of December, which had a combined market value of £80.8bn.
Despite the drop, the FTSE AIM All Share rose 4.65 per cent over the month with the total value of shares traded reaching £3.5bn, up over 50 per cent on the previous year.
Boxall says while there is an appetite for smaller companies, corporate brokers of AIM companies may miss out to crowd funding ventures.
“It’s clear that the shareholders of smaller companies seeking an exit or expansion capital to grow have many options open to them in the current low interest rate environment,” he says. “The recent takeover activity on AIM shows industry peers are keen buyers, supported by the availability of cheap debt. The continuing strength of the US dollar suggests decent UK businesses are also obvious targets for US based acquirers.
Boxall adds: “The large number of crowd funding possibilities also means that earlier stage businesses can obtain funding through the crowd route far quicker and cheaper than venturing onto AIM, often at valuations bordering on the ridiculous that wouldn’t be achieved through an AIM listing. Public markets can also prove tricky for earlier stage businesses as shareholders often lose patience quickly causing increased share price volatility.
“The London Stock Exchange may have missed a trick by not developing its own separate crowd funding venture, which would also have served as a potential feeder for AIM.”