London's AIM is already on its knees - and private markets will deliver the fatal blow.
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The Alternative Investment Market (AIM) is no longer fit for purpose. Having been in decline for a long time, the current lack of liquidity and funding, low trading volumes, and erratic share price movements have deterred firms from listing. Some are even actively delisting in favour of going private.
Having failed to attract scaling and emergent businesses, AIM has also been left dependent on legacy firms, such as energy and finance stocks, which ultimately lack the high growth potential and appeal of more attractive sectors such as technology. Combine this with the current exodus from the London Stock Exchange main market - facing its biggest net outflow of companies since 2009 and a projected 15-year low in new listings – and it’s clear the UK is facing something of a reckoning when it comes to the appeal of its public markets.
Even with improvement plans, from more advanced technology and slashing of the red tape, the burden of a public listing continues to act as a significant deterrent. Many firms now prefer to stay private and tap into the deep pockets of rapidly growing private markets.
Traditionally, companies went public to access larger pools of capital despite the high costs and complexity of the IPO process. However, in recent years, UK private markets have made strides forward, with improved liquidity and funding positioning them as viable competitors to public markets and allowing companies to stay private for longer.
