Think tanks propose axing London AIM market due to tech float failures

London’s‍ junior stock exchange should be scrapped as part of a radical ‌overhaul needed to attract fast-growing ⁣firms and rejuvenate the UK’s capital markets, according ⁢to two influential think tanks. The⁣ Tony Blair Institute and the centre-right think-tank Onward ⁣have released a report stating that the UK’s capital ‍markets are “not fit⁢ for⁣ purpose” and require⁣ “radical surgery”. London, once the world’s largest stock exchange, now ranks sixth and has struggled ⁤to secure major⁤ new listings from tech companies. Companies such‌ as‍ CRH, Flutter, and Arm have shifted their primary listings to ‍the US⁣ in ⁢order⁣ to‌ increase‌ their valuations. ‌The report highlights that London’s market is heavily reliant on legacy firms in energy and finance ⁢sectors, lacking the ⁣growth potential⁢ of ‌technology businesses. It suggests merging Aim with​ LSE’s main market while creating a special route for⁣ high-growth ​firms‌ in emerging technology sectors.⁤ The report also‍ recommends maintaining tax breaks for investors in junior market⁢ stocks who seek high growth opportunities. Last year alone, 76 companies delisted‍ from London’s Aim ​market due ⁤to low liquidity, diminished investor confidence, and limited available capital.⁤ Zachary Spiro from Onward stated ‌that although the UK’s ⁢ability​ to ⁤finance growing tech companies is currently at ​risk, decline ⁢is ‍not inevitable. Other recommendations include ‍reducing red tape and establishing a £1bn Growth⁣ Capital fund to support science and tech ⁢firms by creating ‌five‍ large-scale growth investors.
However, some argue for measures supporting ⁢the Aim market instead ⁣of scrapping it⁢ entirely.⁢ Barclays has proposed tax reliefs for investors in businesses that graduate from Aim⁤ to the main market. ‌James Ashton from Quoted Companies Alliance ‌emphasized that⁢ Aim provides an ‌essential alternative for growth companies not yet ready for the main market; its ‍loss would ⁣narrow funding options in the⁤ UK while ⁢promoting ​a one-size-fits-all approach that penalizes small​ entrepreneurial stocks.
Benedict⁣ Macon-Cooney from The Tony Blair Institute believes bold reform is necessary if Britain wants to reclaim ‌its financial powerhouse status by attracting top ​talent and building⁤ superstar ⁤companies.