Supporting Thames Valley companies 21 years on
The world’s most successful growth market and home to no less than 63 Thames Valley-based companies, AIM turned 21 in June. As it celebrates this important milestone, it is an opportunity to shine a light on regions such as the Thames Valley and the companies contributing to the market’s success, writes Claire Dorrian, senior manager-primary markets of London Stock Exchange Group.
The area’s AIM companies have an aggregate market capitalisation over £3.3 billion, and today the average value of a Thames Valley company on AIM is over £50 millon. Companies include 23 IT and telecoms firms, many valued in the hundreds of millions of pounds as well as seven successful biotech firms, working at the cutting edge of scientific discovery.
This not only reflects the growing number of successful entrepreneurial businesses flourishing across the region but also AIM’s ability to support more mature companies.
Only in April, Theale-based investment company, Osirium, joined on the market, raising £8.8m, valuing it around £16m. It is just one of the 25 successful initial public offerings, including chocolate maker and retailer Hotel Chocolat and British fashion chain Joules, we’ve seen on AIM in the first half of 2016.
And despite volatile economic market conditions, over 70% of these stocks are trading up, with average post IPO performance running at 17%. They have an average market capitalisation of approximately £90m, a stark difference compared to a decade ago when the average value of new companies joining AIM was £17m.
Again, these 25 companies show the market is stepping up, particularly post the financial crisis. Whilst we’ve seen other global markets struggling, AIM has in fact been outperforming the main market in some key respects. Average performance of AIM companies that joined in the past three years is +11%, compared with +6% for the main market.
That’s not to say that investment in the financial markets doesn’t carry risk. When investing equity capital there is always an evaluation of risk versus reward, but this is a feature of any investment on any market. Through venues like AIM, London Stock Exchange is committed to giving investors the opportunity to have a stake in innovative ambitious companies that will shape the future of our global economy.
AIM is a tremendous success story for the Thames Valley and Britain as a whole, re-balancing the economy away from debt towards equity and boosting access to vital growth finance for thousands of ambitious businesses. Equity funding is the right sort of capital for these companies because they should be spending as much as they can to innovate, grow and create jobs, rather than having to prioritise servicing a loan.
Figures for the latest year available on AIM’s impact on the wider economy show companies who raised capital on AIM, created 731,000 jobs, paid £2.3b in tax and contributed £25b alone to UK GDP.
In June 1995, the market was launched with just 10 companies and an aggregate value of £82m. More than two decades on, AIM is now the world’s most successful and established market for growth companies, with the total value of companies reaching £75b. As it continues to connect thousands of smaller companies to capital, support the wider UK economy and develop in its own right, we must ensure AIM carries on thriving and supporting companies from the Thames Valley and beyond.
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