Examination of SME Capital Marketplaces Globally with a Focus on London Stock Exchange Group’s AIM Marketplace

The focus of this Capstone project is to compare the London Stock Exchange International market for smaller growing companies (AIM) with other international stock markets for Small and Medium Enterprises (SME). AIM is the London Stock Exchange Group’s (LSEG) international market for smaller growing companies, and is arguably the most successful growth market in the world. Since its launch in 1995, over 3,000 companies from across the globe have chosen to join AIM.  Celebrating AIM’s twenty year anniversary, the LSEG seeks to examine AIM and other SME marketplaces and analyze to what extent these marketplaces have impacted economic growth.

The Capstone team prepared this report based on data research, comparative analysis, and case studies.  The team studied the differences between Main Market and AIM in terms of listing criteria and market share, to gain insights into their different approaches to help companies with financing needs and to benefit the UK economy. The team applied macro-economic theories to quantify the economic contribution from AIM-listed companies since inception, both by country of incorporation and by industry. Indirect impacts from AIM, e.g. promotion of entrepreneurship and innovation, are also analyzed.

In cross-market research, the team studied five international SME markets, located in Brazil, Australia, Korea and Canada, and selected TSX Venture Exchange, Canada's primary venture equity market, as a comparable for AIM. The comparison is broken down into general performance comparison of listed companies and industry-focused case analysis.

The team assessed the listed companies’ performance on both exchanges based on Gross Profit, CAPEX, TAX, including income tax expenditure, VAT and stamp duty as well as the Number of Employees in order to measure the economic contribution.

The team’s findings show that AIM has contributed to UK macro economy and provided an effective means for SME capital raisings. In line with the UK government’s initiatives of driving economic growth by supporting start-up companies, LSEG endeavors encourage entrepreneurship through the establishment of ELITE program, a platform designed to help UK entrepreneurs prepare for their next stage of development. It is observed that AIM, as well as the High Growth Segments in the Main Market, became popular with start-ups that require access to capital. The team also highlighted AIM’s roles as an “exit” route for financial sponsor investments and as a “home” for small-sized investment funds, including one specializing in commercialization of academic research.