AIM has established itself as the world’s leading stock market for young growing companies, according to new research published today by the London School of Economics.

The Study ‘From Local to Global- The rise of AIM as a stock market for growing companies’ was commissioned by the London Stock Exchange and looks at the growth and development of AIM since its inception in 1995, including the quality of the market and the evolution of the regulatory framework. It documents the rapid expansion of the market both domestically and internationally- since 1995 some 2,300 British and 400 foreign companies have come to AIM, raising a total of £49 billion.

Some of the report’s specific findings include:

• Although a large proportion of AIM companies are early-stage businesses and/or operating in high-risk sectors, the failure rate on AIM is low, running at less than 3 per cent in the last four years;

• With an average monthly trading volumes of just over 20 million shares, liquidity in the shares of the larger AIM companies is comparable to that of similar-sized companies on the Main Market; the introduction of the new trading system SETSmm, succeeded in its purpose of increasing liquidity and reducing spreads on the largest stocks;

• The competitive strength of AIM lies partly in its distinctive regulatory system which is tailored to the needs of smaller companies and partly in its location within the City of London;

• AIM continues to provide vital support for the UK’s small and medium-sized enterprise sector, including companies based in the regions;

• An analysis of after-market returns on new admissions since 2000 suggests that, on average, investors in new AIM companies have outperformed the wider market; and

• AIM has matured since the collapse of the dot.com boom and now attracts a wide range of investors, including some of the world’s leading institutions. There is a need to attract more investment from the countries in which non-British companies are based.

The report also shows that the amount of capital raised on AIM has increased sharply in the last few years, rising from £2 billion in 2003 to £15.7 billion in 2006 and that income for the City generated by AIM is estimated to be running at around £1 billion a year, of which about half comes from non-British companies.

We concur with the LSE’s concluding observation that the core mission of AIM is likely to remain what it has been from the start, to provide a market for small and medium-sized companies which are ambitious to grow and need capital for expansion.”

To view the summarised report click here and to view the full report click here.