AIM Report 2019

52 53 QUANTITATIVE ANALYSIS HOW AIM OFFERS BREAK DOWN AIM offers by sector There remains a wide variety of companies listed on AIM, and of the 901 firms, there is no single sector that dominates. As of May 2019, Software & Computer Services was the largest sector, with 10.8% of the market, followed by Financial Services with 10.3%. These were the only two sectors to corner more than 10% of the market share, with Mining having dropped back from its leading position in our last report, from over 10% in September 2017 to just shy of that mark with 9.8% in May 2019. Having said that, the overall composition of the market has remained relatively stable, with no major changes. It has the same top 5 as in 2017 and indeed the same since our first report in September 2016. The Other category contains a wide variety of sectors that make up less than 1% of the market. Demonstrating the continued diversity available on AIM, this category includes such sectors as Aerospace & Defence, Beverages and Forestry & Paper, to name only a few. However, a small number of companies does not necessarily translate into a small market capitalisation, as this depends far more on the size of company in that sector. For example, just 0.4% of the market is comprised of companies in the Beverages category, but, thanks largely to the success of Fever- Tree, the sector has an overall market capitalisation of £3.76 billion - far higher than, for example, Health Care Equipment & Services, whose companies have 3.6% of the market, but a combined market capitalisation of £2.73 billion. AIM offers by market cap size Underlining AIM’s position as a destination for young and growing companies, the vast majority of organisations quoted on the market have a capitalisation of less than £100m (77% of the whole market), with those of £500m or more accounting for just under 5% of the overall market. However, while the overall picture of the market has not changed substantially since September 2017, there does appear to have been a slight shift higher up the market capitalisation range. In 2017, the £25 million to £50 million range included over 150 companies and was much closer to the £10 million to £25 million range, with those in the higher brackets seeing lower numbers of companies within them. Today, though, the three ranges that cover the market between £25 million and £250 million are much closer together, suggesting that AIM is maturing as more companies increase their market capitalisation and grow their businesses. AIM-based tax efficient offers OVERALL MARKET A number of investment managers provide products that invest in AIM-quoted companies to help clients take advantage of the tax efficient benefits that can apply. According to the MICAP platform, there had been a total of 61 offers in this space by June 2019, with the first recorded back in March 2001. While growth in the market was initially relatively steady, it underwent a major expansion between 2013 and 2017, with at least six new products being launched in each of those years. The best year for new offers came in 2017, when 10 were launched. Since the start of 2018, however, there have been only five new offers launched up to June 2019. Changes introduced in 2013 allowing AIM shares to be held in an ISA helped drive the popularity of some AIM focused tax advantaged offers from that date. However, the recent slowdown may be explained by the changes to EIS and VCT, which pushed up the risk requirements of these products. In the case of BR, the slowdown may be attributed to uncertainty around its future role amid the Office for Tax Simplification’s inheritance tax review. SOURCE: LSE AIM STATISTICS MAY 2019 MARKET COMPOSITION BY SECTOR Alternative Energy Industrial Engineering Chemicals Industrial Metals & Mining Construction & Materials Leisure Goods Electronic & Electrical Equipment Media Equity Investment Instruments Mining Financial Services Oil & Gas Producers Food Producers Pharmaceuticals & Biotechnology General Retailers Real Estate Investment Trusts Technology Hardware & Equipment Health Care Equipment & Services Software & Computer Services Travel & Leisure Household Goods & Home Construction Support Services Other 0 2 4 6 8 1 3 5 7 9 10 11 CUMMULATIVE NO. OF AIM OFFERS OVER TIME MARKET COMPOSITION BY MARKET CAP SIZE 200 150 100 50 Number of companies 0 0-5 5-10 10-25 25-50 50-100 100-250 250-500 500-1000 1000+ 2001 2009 2003 2011 2005 2013 2007 2015 2017 2019 20 0 40 60 80 Industry analysis / Quantitative analysis