Quality of stocks on AIM improves

The quality of businesses on AIM (Alternative Investment Market) is improving. Fundamental Asset Management (FAM) says this is good news for investors looking for unique inheritance tax planning benefits.

Quality of stocks on AIM improves

Over the 7 months to the end of July 2016 there were 30 new admissions (excluding reverse takeovers and re-admissions) to AIM. Of these, 25 were qualifying for IHT planning purposes and 16 appear profitable. Of the 60 cancellations, 33 of the companies qualified for IHT planning purposes, 27 didn’t qualify and a significant 46 were loss making.

The new issues included several substantial, profitable and cash generative businesses. These included Watkin Jones PLC (AIM: WJG), the UK developer with a focus on the student accommodation sector, Midwich Group plc (AIM: MIDW), a specialist audio visual and document solutions distributor and Hotel Chocolat (AIM: HOTC), the premium British chocolatier.

Four substantial companies moved to the main market. This pulled back the overall market value of AIM which would have been even higher than the stated £77bn at end of July 2016 (December 2015: £73bn).

Market movers included Market Tech Holdings (Market cap £794m), GVC Holdings (Market cap £2bn), VinaCapital Vietnam Opportunity Fund Ltd (Mkt cap £474m) and Dalata Hotel Group (Mkt cap £640m).

Chris Boxall, co-founder of FAM, concluded: “AIM continues to be a market for small, relatively early stage businesses with pharmaceutical stocks currently popular, replacing the previously fashionable resources sector. However, it is also clearly attracting a growing number of mature, profitable, family or founder controlled businesses who view AIM as a good route to access the capital markets yet still retain an active interest and enjoy the tax benefits of Business Property Relief.”

 

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