In his recent commentary published in The Sunday Times titled We should raise our sights and turn Aim into London's Nasdaq, Tim Cockroft rightly highlights the necessity for revitalising London's Alternative Investment Market (AIM), suggesting its evolution into the UK's equivalent of Nasdaq.
While his proposals outline valuable strategic and regulatory reforms, the recent introduction of the proposed Private Intermittent Securities and Capital Exchange System (Pisces) adds a critical dimension to this discussion.
Pisces, championed by the UK government and the London Stock Exchange Group, aims to capitalise on the rapid growth in private secondary share transactions, which reached a remarkable $160bn in 2024. Contrary to critics' assessment of Pisces as a threat to AIM, it is potentially complimentary as it is directed at private market liquidity rather than public fundraising.
Pisces and AIM can - and should - coexist effectively. Pisces offers a platform for companies seeking efficient liquidity without the regulatory burdens of public markets, answering a clear demand within today's evolving investment landscape. Yet, its function should not and does not replace the crucial role AIM plays as a source of fresh capital for innovative, growth-orientated public companies.
AIM's challenges are significant. The departure of 89 companies in 2024 underscores genuine concerns around regulatory burdens, high operational costs, and diminished investor incentives due to recent adverse tax proposals. Cockroft's suggestions of introducing tax incentives alongside successful models such as the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) are compelling. Such targeted reforms would encourage longer-term, growth-orientated investments.
Moreover, Cockroft's recommendation of structurally decoupling AIM from the LSE to sharpen its identity as a growth-focused platform is equally persuasive. A standalone, clearly defined public market committed exclusively to nurturing early-stage growth companies would cultivate a stronger, innovation-driven investor community.
However, there is scope to go further. As AIM undergoes the necessary regulatory simplification and incentive realignment, Pisces can simultaneously provide valuable private market liquidity. This dual approach would create a robust financial ecosystem catering to different stages in the corporate lifecycle, with Pisces acting as a pre-step for companies managing their way through the crucial initial growth phases. Such a framework would significantly enhance overall market competitiveness, offering a clear, growth-oriented pathway tailored to corporate needs at varying stages of their lifecycle.
The UK has ample entrepreneurial talent and investment capital, yet presently lacks an effective bridge between the two. AIM, reformed and reinvigorated, could serve precisely that purpose, while Pisces could function as a complementary platform, allowing companies flexibility in their growth trajectory, initially privately held and subsequently transitioning to public markets such as AIM.
With appropriate regulatory clarity, investor incentives, and strategic vision, the UK can cultivate a capital market ecosystem in which AIM and Pisces coexist symbiotically, each fulfilling distinct yet complementary roles.
Hunters continues to support businesses navigating these complex market dynamics, providing expert guidance throughout both private market transactions and public listings. Our experienced legal team is dedicated to assisting ambitious growth companies in maximising opportunities within this evolving capital landscape.
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