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Summary
- The AIM Market segment of the London Stock Exchange has been house to some of the most successful start-up companies in the world.
- Having access to LSE would mean more such companies can achieve an accelerated growth rate.
- With the laws now set to change, the Indian Start-up segment may see a new phase of growth and will vie for listing overseas
In a bid to get its standing firm among the largest stock exchanges in the world, the London Stock Exchange has been approaching Indian start- ups to seek listing at its AIM segment. The exchange which has seen a very low number of companies coming to register themselves there because of the impact of the coronavirus pandemic on the global economy is attempting to gather pace to beat the current slump. The AIM segment of the exchange, though risky has been very successful and the LSE is leaving no stone unturned to aggressively market it to the world.
Opportunity for Indian firms to directly access the foreign capital markets
This call of LSE to for Indian companies is coming in view of the Indian government’s plan to liberalise its regulations to directly allow Indian companies to access foreign capital markets. Previously any Indian company desirous of raising capital from foreign capital markets had to use either the ADR or the GDR route. This route, though not very cumbersome for larger companies, created massive administrative bottlenecks for smaller firms. With these laws now set to change the Indian Start-up segment may see a new phase of growth. India is the third-largest start-up ecosystem in the world with more than 50,000 companies, with their numbers growing at the rate of 12 to 15 per cent per year. Several large global investment banks like Softbank and Sequoia capital have made investments into Indian start-ups, which is testimony to how strong their business models are. Having access to LSE would mean more such companies can achieve an accelerated growth rate.
The London Stock Exchange and its AIM Segment
The AIM (Alternative Investment Market) segment is the London Stock Exchange's trading segment for small and growth companies coming both from within the United Kingdom as well as other parts of the world. AIM Market provides an ideal environment for these ambitious businesses to access capital and liquidity of the London system of markets, which is the largest and deepest pool of international capital in the world.
The shares of AIM listed businesses, however, belong to the high-risk class, but also come with very high rewards potential as well. The stocks listed on the AIM which at one point of time struck fear in the hearts of regular investors, who believed that the market segment was full of small mining companies only, whose volatility wasn’t worth considering, now boasts of companies which are valued in billions and have delivered returns far exceeding their large-cap counterparts donned by the FTSE 100 at the London Stock Exchange main market.
Top Four Start- Up Success stories from the AIM market
- Silence Therapeutics Plc – (LON:SLN) Silence Therapeutics Plc is a United Kingdom based pharmaceuticals and biotechnology company, majorly involved in the research and development of pharmaceutical products based on RNA (ribonucleic acid) technology. This technology harnesses the body’s natural occurring mechanisms to create therapeutic effects within its own cells of the body. Company’s pipeline basically includes various programs under three core categories which are hematology, Cardiovascular diseases, and rare diseases. Under Hematology, the programs include Beta Thalassemia which has completed the pre-clinical phase, Myelodysplastic Syndrome, which has also completed the Pre-clinical phase and an undisclosed indication which is in the discovery phase.
The shares of Silence Therapeutics were trading at GBX 399.00 per share on 12 October 2020 at 11:37 AM GMT+1.
- IMImobile PLC – (LON:IMO) IMImobile Plc is the United Kingdom domiciled communications software provider, the company claims that its products help its clients improve their interactions with the consumers for a better experience and reduce operating cost. The shares of IMImobile have gained over 26 per cent in value since the beginning of the year. In the interim results released by the company for the first quarter ended on 30 June 2020, group’s gross profit was reported higher by around 20 per cent year-on-year.
The shares of IMImobile were trading at GBX 430.00 per share on 12 October 2020 at 11:52 AM GMT+1.
- Keywords Studios Plc - (LON:KWS) Keywords Studios Plc is an electronics entertainment company providing its services to the global video games industry. The shares of the company have gained 24 per cent in value since the beginning of the year. In a trading statement released on 30 January 2020, the company had informed that its revenues would be around €326 million for the full year of 2019 compared to €250.8 million reported by it for the year 2018, registering a growth of 30 per cent.
The shares of Keywords Studios were trading at GBX 2188.00 per share on 12 October 2020 at 11:58 AM GMT+1.
- Eddie Stobart Logistics Plc – (LON:ESL) Eddie Stobart Logistics Plc is a trucking, logistics and supply chain providing company. In its results for six months ended 31 May 2020, the underlying loss before tax stood at £16.3 million as compared loss of £3.9 million in the same period 2019.
The shares of Eddie Stobart Logistics were trading at GBX 10.13 per share on 12 October 2020 at 11:58 AM GMT+1, surging 52.26 per cent over previous day’s close.
New IPO’s that have entered the AIM market this year
As of 30 September 2020, eight companies have come out with their IPO’s on the AIM segment of the London Stock Exchange. They are AEX Gold Inc. which was admitted to the exchange on 31/07/2020. Elixirr International Plc which was admitted to the exchange on 09/07/2020. FRP Advisory Group Plc which was admitted to the exchange on 06/03/2020. Gemfields Group Limited which was admitted to the exchange on 14/02/2020. Inspecs Group Plc which was admitted to the exchange on 27/02/2020, Kooth Plc which was admitted to the exchange on 02/09/2020. The Barkby Group Plc which was admitted to the exchange on 07/01/2020 and Various Eateries Plc which was admitted to the exchange on 25/09/2020 and the combined market capitalisation of all these companies as on date was £836.47 million.
