The number of flotations on the London Stock Exchange’s junior AIM market have plummeted to their lowest level since the financial crisis as fears grow the market could be hammered by a tax raid from Rachel Reeves.
Only £88.6m was raised through IPOs on the junior market over the last year to 30 September, just one per cent of the £8.8bn raised during the market’s peak year of 2006/07, according to analysis from UHY Hacker Young.
The number of companies on AIM stood at 704 at the end of August 2024, down by seven per cent from 753 at the end of 2023 and by 58 per cent from its peak of 1,694 companies at the end of 2007.
The data comes as industry expects have sounded the alarm over rumours that Chancellor Rachel Reeves could scrap inheritance tax relief on AIM during this month’s budget.
In a letter to City minister Tulip Siddiq last month, London Stock Exchange boss Dame Julia Hoggett said that the “ongoing viability” of AIM would be threatened by the rumoured scheme.
Meanwhile, investment bank Peel Hunt calculated that the proposed plans could cause 15 per cent of the cash in AIM to be withdrawn immediately, leading to a 20-30 per cent drop in the value of its stocks.
“Speculation about the future of tax relief on AIM shares is very unhelpful for the market,” said Colin Wright, chair of UHY Hacker Young. “Now that interest rates are finally falling that should help AIM.”
“We hope the new government will make it clear that they are not planning to subject AIM shares to IHT. That would lift a big cloud from the UK’s biggest growth company stock market.
“More management teams at growth companies now look toward US markets as they can offer much higher valuations for companies. PE and VC investors can also outcompete AIM due to lower compliance and reporting burdens. For a lot of fast-growing companies, the IHT exemption of listing on AIM has been that advantage.”