UK AIM listings of firms valued at over £1 billion are at a 9-year low, notes Myles Milston, CEO and co-founder of a capital markets technology company, Globacap. According to recent data, just six firms top that amount.
In an article in Proactive Investor, AIM is described as at risk of becoming irrelevant. An analyst at AJ Bell notes that at the end of 2021, there were 30 firms achieving the £1 billion valuation, describing the situation as “perilous.”
Boosting capital markets and listed shares has been a goal of the UK government, but it appears that policymakers have their work cut out as firms remain private longer and some firms seek locales with greater liquidity – like the US.
Milston slammed AIM, describing it as “no longer fit for purpose” and in decline. Milston is reiterating his strong criticism of AIM hammering the exchange once again referencing new data.
“There is a persistent lack of liquidity, dwindling funding opportunities, low trading volumes and erratic share price movements. This deters other firms from listing and forces many to actively delist. The UK government’s PISCES framework, and the fact that LSEG [London Stock Exchange Group] has been driving its development, is an acknowledgement of the inevitable demise of AIM,” said Milston. “With PISCES, private companies can access the funding and liquidity they need while avoiding the complexity and expense of going public. Investors will be able to realise their gains sooner, as it will be easier for them to find buyers for their shares.”
PISCES, or Private Intermittent Securities and Capital Exchange System, seeks to address the shortcomings of AIM. PISCES may go live as soon as 2025. Even still, Milston has lambasted the UK markets as playing catch up to the US.
“Rather than nostalgically clinging to the ‘good old days’, when there were more small listed firms, greater demand, more new issues and robust small-cap stock performances in the UK, we should embrace the next frontier of capital markets. AIM’s demise clearly signals the market’s direction – towards the rise of private markets,” adds Milston.
Private securities and alternatives have boomed in the US. Meanwhile, publicly traded firms have experienced an extended period of decline. The rise of alternative assets, new exemptions, and better technology will probably further fuel the growth of private markets. Add this to the fact that regulators have piled regulation upon rule for listed firms, driving the cost ever higher, thus compelling issuers to remain private as long as possible.
Milston believes that by “doubling down on private markets and introducing PISCES, the UK can position itself at the forefront of this boom, increasing investment into innovative private firms, boosting innovation, creating jobs and ultimately, driving economic growth.”