Aim High: The London Stock Exchange Alternative Investment Market – Suitable Companies and Preparation For Listing

The Alternative Investment Market (AIM) of the London Stock Exchange is designed for smaller, growing companies seeking to expand.

AIM provides a dynamic platform for businesses to access public equity capital, and since its inception in 1995, it has become a thriving environment for companies from a wide range of sectors. Here we explore what kind of companies should consider listing on AIM and how they can prepare for such a significant step, including the benefits of outsourcing key functions:

SUITABLE COMPANIES FOR AIM LISTING

While AIM is open to various businesses, certain types are particularly well-suited for listing on this platform:

• Early-Stage and Growth Companies: AIM caters to companies at the beginning stages of their development. Unlike the Main Market of the London Stock Exchange, AIM is more accommodating to businesses without extensive trading histories. This makes it ideal for startups and early-stage companies with significant growth potential.
• Innovative and High-Growth Sectors: Companies in sectors characterised by rapid innovation and high growth, such as technology, biotechnology, clean energy, and fintech, often find AIM’s environment conducive to their needs. These sectors typically require substantial capital to fund research, development, and expansion, which AIM can provide.
• Small and Medium Enterprises (SMEs): AIM is specifically designed for SMEs that may not meet the stringent requirements of traditional capital markets. These businesses can leverage AIM to gain visibility, credibility, and access to a larger pool of investors.
• International Companies: AIM has become an attractive listing destination for non-UK companies looking to raise capital. The platform offers a gateway to European capital markets, benefiting companies seeking to enhance their international profile.
• Companies Seeking Flexibility: AIM offers a more flexible regulatory environment compared to the Main Market. This flexibility includes less stringent reporting requirements, making it a viable option for companies looking for ways to grow without the heavy compliance burdens of larger exchanges.

The London Stock Exchange has an assessment too that companies may use to assess whether they are ready for an AIM listing: Are you ready to list?

ENGAGE, DEVELOP, ESTABLISH, EXECUTE AND ENSURE: PREPARING FOR A LISTING ON AIM

Listing on AIM is a significant step that requires careful planning and preparation. Here is a streamlined approach consisting of five essential steps to prepare a company for an AIM listing:

• Engage a Nominated Adviser (NOMAD) and Key Advisors

A NOMAD is essential for any company aiming to list on AIM. The NOMAD assists with eligibility assessments, regulatory compliance, due diligence, and the overall listing process. Choosing an experienced NOMAD with a successful track record can significantly impact the smoothness of the listing process.

In addition to a NOMAD, appointing other key advisors is crucial. These typically include:

1. Legal Advisors: Ensure compliance with all regulatory requirements and help draft necessary documentation.
2. Auditors: Provide credibility to the company’s financial statements and ensure integrity and transparency.
3. Brokers: Assist in marketing the shares to potential investors and provide valuable market insights.
4. Financial PR firms: Manage investor relations, media relations, and overall communication strategy to build and maintain investor confidence.

• Develop a Robust Business Plan and Admission Document

A well-articulated business plan is essential for attracting investors. This includes detailing the company’s vision, objectives, growth strategy, and market potential. Additionally, the admission document, which acts like a prospectus, should provide comprehensive information about the company’s operations, financials, risk factors, management team, and the intended use of the capital raised.

• Establish Corporate Governance Structures

Adhering to good corporate governance practices is vital for a successful AIM listing. Companies should not only form a strong board of directors with a balance of executive and non-executive members but should also implement robust governance policies and procedures that align with AIM’s requirements. Good corporate governance enhances credibility and investor trust, and this key function is led by a strong and experienced Company Secretary.  Many AIM companies adopted the Quoted Companies Alliance (QCA) Corporate Governance Code which is a flexible set of principles designed to help growing companies run better.

• Execute Marketing and Investor Relations Strategies

Effective marketing and investor relations are critical. Engage with potential investors through roadshows, presentations, and media to generate interest and create a favourable market environment. Maintaining robust investor relations post-listing helps sustain investor confidence and supports long-term growth.

• Ensure Robust Internal Controls and Risk Management

Implementing strong internal controls and risk management practices is crucial for maintaining investor confidence and ensuring long-term success. This includes developing systems for financial reporting, compliance monitoring, and risk assessment. A focus on risk management helps identify potential issues early, allowing the company to address them proactively and maintain a solid operational foundation.

OUTSOURCING KEY FUNCTIONS: A SUMMARY

Outsourcing key functions can provide critical support for companies seeking to list on AIM. As a multijurisdictional full service corporate and fund administration business, we are able to provide IPO Readiness, Company Secretarial, Governance, Administration, Financial Reporting and Accounting services to companies looking to list on AIM. Some of the advantages to outsourcing these functions are:

• Expertise and Compliance: Outsourcing to specialists ensures that all administrative, accounting, and compliance functions are handled by experts familiar with AIM requirements. This reduces the risk of errors and non-compliance, which could jeopardise the listing process.
• Cost Efficiency: For smaller companies and startups, maintaining full-time in-house staff for these functions can be costly. Outsourcing allows companies to access high-quality services without incurring the overhead costs of hiring full-time employees.
• Focus on Core Business: By outsourcing administrative and financial tasks, the company’s management can concentrate on core business activities and strategic planning. This is especially important during the taxing pre-listing phase when focus and agility are critical.
• Scalability: Outsourced services can scale with the company’s needs, providing flexibility as the business grows. This makes it easier to manage increasing administrative and financial complexities as the company expands post-listing.
• Timely Reporting and Efficiency: Professional outsourcing firms ensure timely preparation of financial statements and reports, which is vital for meeting AIM’s regulatory deadlines. This efficiency helps avoid delays and supports a smoother listing process

PARTNERING WITH JTC

AIM offers a conducive environment for early-stage, high-growth companies seeking access to capital markets. By providing a flexible regulatory framework, AIM allows businesses in innovative sectors and SMEs to grow and thrive. Through careful planning companies can leverage AIM to achieve their growth objectives and enhance their market presence.

At JTC we have strong experience in supporting listings on AIM and the Main Market of the London Stock Exchange. We have an extensive network of specialist advisors including NOMADs, Brokers, Lawyers and other professionals with the required experience and expertise to advise on and to deliver a successful AIM listing.

JTC is one of the largest, and the only listed, independent fund administrators providing a range of services, including administration, accounting, financial reporting, corporate governance, company secretarial and IPO readiness.

Including our most recent acquisition of Hanway Advisory, we have a strong team of 18 specialist governance professionals based in London looking after a portfolio of 22 listed entities and their subsidiaries. In addition, we have a dedicated team of 35 financial reporting and accounting professionals supporting these companies based in Cape Town.

For more information on our listed services, please visit our website here 

Please contact Susan Fadil or Christopher Gibbons, to speak to us about preparing for your AIM listing plans.