Alternative Investment Market (AIM)

What is Alternative Investment Market (AIM)?

The Alternative Investment Market (AIM) is a sub-market of the London Stock Exchange (LSE) designed for smaller, growing, and riskier companies to raise capital through public equity. Launched in 1995, AIM offers a more flexible regulatory environment compared to the main market.

Purpose

AIM was created to:

1. Provide access to capital for early-stage or high-growth companies
2. Encourage entrepreneurship and innovation
3. Offer investors exposure to smaller businesses with higher growth potential

Key Features

• Less stringent listing requirements than LSE’s main market
• Companies are not required to have a trading history or minimum market capitalization
• Every listed company must appoint a Nominated Adviser (NOMAD) who guides them through compliance
• Attracts both domestic and international companies

Importance

• Serves as a launchpad for startups to become public companies
• Encourages investment in innovation-driven sectors like tech, biotech, and cleantech
• Offers investors a chance to diversify into emerging businesses

Benefits

1. Lower costs and simpler process to go public
2. Encourages global participation
3. Potential for high returns in successful cases
4. Ongoing access to secondary fundraising

Risks

1. Higher volatility and risk due to smaller company size
2. Lower liquidity compared to main market stocks
3. Greater chance of business failure or underperformance