Breedon has announced plans to move from AIM to London’s Main Market. There was a time when that was all the rage, with companies eager to step up and have the badge of honour of being a Main Market-listed business.
There was also the argument that many fund managers weren’t allowed to invest in AIM stocks and so by moving up to the Main Market they could get on the radar of more institutional investors. That doesn’t really apply these days as most fund managers don’t have those restrictions.
AJ Bell’s Russ Mould said: “Instead, a key reason to switch is to benefit from tracker funds buying the shares. Breedon is valued at £1.3 billion which would put it in the middle of the FTSE 250 index by size. Once the company qualifies for the index, tracker funds mirroring the performance of the FTSE 250 would need to own the shares so they become active buyers.
“Reputation is the other main reason for switching markets these days as a company can say it adheres to the stricter rules that come with the Main Market.
“AIM was originally pitched as a stepping-stone for smaller companies, a place for them to tap capital markets and grow. Moving market once they’ve seen significant growth makes perfect sense and in Breedon’s case it has greatly expanded sales and assets since joining AIM.
“ASOS made the switch last year and going back a while, Domino’s Pizza and Petra Diamonds are other examples of companies to move from AIM to the Main Market.”