Moving on up! The UK's surge of capital market reforms has reinvigorated the debate about stepping up from AIM to the Main Market. In the latest Mergerspresso soundbite, Gareth Jones and Giles Distin discuss stepping out from the underground club scene onto the Pyramid Stage...
Transcript
GJ: Making the journey from AIM to the Main Market! Mergerspresso, AG's corporate finance soundbite, looks at the resurgence in companies looking to make the step up. I'm Gareth Jones.
GD: And I'm Giles Distin. The FCA's reforms to the UK Listing Rules in July 2024 have changed the landscape significantly, reducing the jump between AIM and Main. Continuing obligations for Main Market companies are now more permissive than AIM in some cases and eligibility requirements have been significantly modified.
GJ: For those making the leap, Main Market eligibility criteria includes a minimum £30 million market cap, IFRS-compliant accounts and a 10% free float. For the process itself, issuers will need to do some due diligence, prepare a prospectus and a working capital and FPPP review.
GD: So why step up? A Main Market listing boosts profile, attracts wider investor interest, and opens the door to inclusion in indices. It's also seen as the "gold standard" for UK-listed companies. With lighter-touch regulations and simplified prospectus requirements on the horizon, the move is even more appealing. It's a bit like stepping out from the underground club scene and performing on the main stage. Think [M People] or [Primal Scream] moving from niche hits to chart-topping anthems.
GJ: But it's not necessarily right for all AIM companies. Main Market rules are more detailed, with higher governance obligations and increased costs. Investors may also lose AIM-specific tax advantages, like EIS and VCT reliefs, and founders may no longer benefit from IHT reliefs. Given the average market cap of an AIM company is around £97m and the median market-cap even less at £22m, there's a lot of AIM companies that either won't be able to move up or will be defeated by the cost.
GD: But AIM is hoping to undergo its own renaissance, with the LSE actively consulting on reforms to enhance its appeal, and position it once again as a platform for growth companies. It remains to be seen if they can do it, but for now, we expect more of the larger AIM companies to give some serious thought to moving on up in the hope that their light continues to shine on.
GJ: We'd love to hear your thoughts – are you expecting lots of step-ups? Get in touch if you'd like to chat, and catch you next time.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
