London’s AiM market has shed its ‘wild west’ reputation 25 years on from its launch to become a fertile hunting ground for investors, Adrian Lowcock of Willis Owen says.
The success of household names such as ASOS, Boohoo and Fevertree is proof that AiM has become a legitimate and profitable source of investments since launching in June 1995, he adds.
The alternative investment market was set up as a sub-market for fledgling companies to access cash, and has grown from just 10 firms with a market cap of £82.2m to house more than 800 companies worth £90bn+. In fact, many of these firms are worth more than £1bn in their own right.
In its early years, AiM acquired a reputation for housing highly speculative companies whose share prices rose dramatically and then fell to earth.
There is perhaps no better example than during the period 1999 to 2002, when a swathe of fast-growing AiM firms went into administration and took investors’ money with them.
That, and the London Stock Exchange’s relaxed approach to regulating AiM, earned it the reputation of being the ‘wild west’ in investment circles.
However, while there have been highs and lows for individual companies, AiM has proved itself to be a highly tax-efficient home for fast-growing smaller companies which offers investors a lot of opportunities.
Adrian Lowcock, Head of Personal Investing at Willis Owen, said: “The AiM market has come a long way over the past quarter of a century, shedding its wild west reputation to provide a springboard for promising companies to secure much needed capital to help them grow.
“These days, there are a number of large, respected firms that are listed on AiM that have been wonderful investments for many investors.
“At a time when the FTSE 100 is so widely researched, it can be difficult to find a diamond in the rough. That’s where AiM comes in and, if investors do their homework, it can be a very profitable hunting ground.
“But of course, while the AiM market has matured, it remains the home of many start-up, early stage companies which can attract speculative investors looking for the next big thing. This can result in share prices being very volatile and potentially being pushed to extremely high levels which are unsustainable.”
Below Lowcock outlines some of the AiM’s biggest success stories and failures in the 25 years since its launch:
The success stories:
ASOS floated on AiM in October 2001 and since then has become one of the UK’s greatest e-commerce success stories. Launching at 20p, ASOS’ share price peaked at £71 before coming back down to around £30 – still a startling return for those who got in early.
Fevertree has arguably been AiM’s biggest success story, with the tonic water maker’s shares growing by an impressive 1100% since it floated in 2014.
Affinity Internet floated near the heights of the dotcom boom, in April 1999, at £12.75 million. The market cap peaked at a market cap of £1.9 billion two years later. It went bust in 2003.
Langbar International which floated on AiM in 2003 as a cash shell. Shares rose from just 10p initially to a peak of £10. However, the business collapsed when it couldn’t confirm the existence of £370m it said it held in a Brazilian bank.
Globo, the telecoms firm, entered administration in late 2015 and was investigated by the SFO for market abuse, accounts falsification and insider dealing.
In 2015, Quindell, a software provider to the insurance industry, was investigated by the SFO for dramatically overstating its results. The firm said it had made a pre-tax profit of £107 million in 2013, but it had in fact suffered a loss of £64 million. The firm’s legal business was bought by Australians Slater & Gordon and the rest of the firm lives on as Watchstone (WTG).
Adrian Lowcock, Chris Tuite
Head of personal investing Director & Head of Consumer Finance
Willis Owen MRM London
07849 846387 020 3326 9925
Notes to Editors
Willis Owen is one of the UK’s leading online investment service providers. Founded more than 20 years ago Willis Owen now has around £1bn of funds under management and has acted as an intermediary for over 150,000 customers and hundreds of millions of pounds worth of investments,
Willis Owen Limited is authorised and regulated by the Financial Conduct Authority.