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AIM at 25: the winners, sinners, blaggards, laggards and bounders

AIM turns 25 on June 19. Who have been the kings of the wild frontier and who have gone down in flames, just like Jesse James?

Abcam - AIM at 25: the winners, sinners, blaggards, laggards and bounders

If you listen to AIM’s many vociferous critics, you’d be forgiven for thinking it is a den of thieves and hucksters.

Unfortunately, the junior market’s chequered history provides a lot of ammo for AIM’s decriers but there have been plenty of success stories too.

Here then, is a brief tour of AIM’s winners, sinners, rampers, happy campers, laggards, blaggards and bounders.

They AIMed, they soared, they conquered

Let’s start with some of the many success stories.

Most investors think AIM is for high-growth start-ups but the market has 16 companies valued at more than £1bn and four of them – Boohoo Group PLC (LON:BO), ASOS PLC (LON:ABC), Abcam PLC (LON:ABC) and Hutchison China MediTech Limited (LON:HCM) have market capitalisations higher than the lowest valued FTSE 100 stock, which is Carnival PLC (LON:CCL), valued at £2.27bn.

Another AIM stock, Fevertree Drinks PLC (LON:FEVR), valued at £2.19bn, is right on Carnival’s shoulder.

Were it not for the fact that AIM stocks are precluded from featuring in the blue-chip index, they would all be knocking on the door for inclusion in the Footsie and in Boohoo’s case, would sashay in to look down its nose at its fellow, lower-valued retailers, Sainsbury’s and Morrisons.

Recent up-and-comers include ITM Power PLC (LON:ITM), Blue Prism Group PLC (LON:PRSM), Keywords Studios PLC (LON:KWS) and Clinigen Group PLC (LON:CLIN).

One former AIM member, Melrose Industries (LON:MRS) has actually made it into the FTSE 100, albeit after leaving AIM. It floated on the junior market in 2003 with a market capitalisation of just £13mln; it is now worth more than £6bn.

Other AIM alumni that have made it into the big time are Domino’s Pizza Group PLC (LON:DOM) and Plus500 Ltd (LON:PLUS), both of which are stalwarts of the FTSE 250.

Other familiar names that moved on from AIM to a main-market listing include Mears Group PLC (LON:MER) and Walker Greenbank PLC (LON:WGB) while well-known companies that moved in the opposite direction from a full-listing to AIM include Young & Co (LON:YNGA), the pubs group, Scapa Group PLC (LON:SCPA), the healthcare outfit, and Johnson Services Group (LON:JSG), the laundry and workwear firm.

Too close to the sun

AIM has had its fair share of shooting stars; companies that grew like topsy only to switch from topsy to turvy, in many cases as a result of overambition.

Take ScotOil Petroleum. You might remember it better as Oilexco, a North Sea oil explorer once valued at £2bn that collapsed into administration in 2009 after oil prices plunged to US$40 a barrel and bankers refused to fund its ambitious near-£1bn exploration programme.

Or another "once worth £2bn" company, African Minerals, formerly known as Sierra Leone Diamond Corporation. It called in the administrators in March 2015 after it fell out with its main backer, China’s Shandong Iron and Steel Group.

Who can forget – try as we might – the dotcom bubble?

Most people still remember Lastminute.com, which is at least still going today. Not so Affinity Internet, which floated on AIM in April 1999.

It was caught up in dotcom mania, and after its market cap zoomed past the £1bn mark in the first half of 2000 it quickly moved to the main market, whereupon it fell almost as quickly as it rose.

By March 2003, the company’s stock market listing was suspended and the administrators were called in.

Go to jail. Go directly to jail – after we extradite you from Goa

Mercifully, there have been few incidents of outright grand larceny in history’s but a couple of cases stick in the memory: Izodia and Langbar International.

Izodia, formerly known as Infobank – I think I am sensing a theme here – was a cash shell sitting on £40mln of cash after falling from grace when the dotcom bubble burst.

A convicted fraudster named Gerald Smith bought a 29.9% stake in the company and somehow persuaded the board to sanction the transfer of £27.3mln into an offshore account, ostensibly to earn a better rate of interest.

The money disappeared from that account into another one. No prizes for guessing whose account that was.

Smith ended up back in prison, sentenced to two consecutive four-year jail terms.

The embezzlement at Langbar, however, makes Gerald Smith’s thieving at Izodia look like a raid on the tea kitty.

Like Izodia, it was a cash shell. In its previous incarnation, it was known as Crown Corporation.

Its new management team claimed to have cash deposits of US$633mln in South America that it had successfully transferred to Europe for investment purposes.

“Our task in rebuilding Langbar has not always been helped by the spread of rumour and false information, often taken out of context, which has been disseminated through the 'internet chat rooms',” said the company’s chief executive, Stuart Pearson (not the former Manchester United centre-forward) in a stock market statement in 2005.

“I would urge all our investors to rely on these official releases from Langbar, rather than chat room gossip,” Pearson said.

Sound advice normally but on this occasion horribly wrong.

A month later trading in the company’s shares was suspended, pending “independent verification of certain of the assets of the company”.

By February 2006, the independent investigation had not been able “to establish the existence of, nor verify the company's entitlement to, any of the relevant assets at any time in the company's history”.

The Old Bill was called in, legal proceedings commenced in the English High Court in March and by April 2006 Langbar was no longer on AIM stinking up the place.

Doubts remain over just how much Pearson knew about the whole scam, described by the Serious Fraud Office’s director at the time, Richard Alderman, as “fraud on a grand scale”.

Victims’ losses were estimated at up to £100mln.

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Price: 1332 GBX

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Market: AIM
Market Cap: £2.88 billion
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