Chart that tells a story - Aim listings

What does this show?

It's the number of new listings each year on the Alternative Investment Market, which caters predominantly for younger and smaller companies compared to the main market or "Official List". It also shows the amount raised by new issues coming to market.

What happened in the mid-noughties?

The peak year for new listings in terms of numbers was 2005, when 519 new companies joined the junior market. But the peak year for amounts raised was the following year, when £9.94bn was raised, and the total number of companies on Aim reached its zenith in 2007, when 1,649 companies' shares traded.

Driving the listings boom was a confluence of a bull market in shares and the "commodities supercycle". Large numbers of the new listings were speculative oil, gas and mining exploration companies, and many of them were already quoted on other exchanges - often in Canada or Australia. So-called "international listings" accounted for 120 of the 399 companies in 2005.

Did the financial crisis put a stop to that?

Indeed. Commodity prices fell steeply. Demand for riskier investments such as Aim shares evaporated. Not only did the number of new listings plummet, but hundreds of companies left Aim. By 2013, there were 1,087 companies - a 34 per cent drop from the peak.

Some moved to the main market, others were taken private or delisted and quite a few went bust - including African Minerals, once Aim's biggest company, which went into administration in March.

Trading in shares may also be suspended for extended periods, either because the company is in financial difficulty, is in the process of negotiating a major transaction, or is appointing new advisers. Shares in 26 companies are currently suspended.

There seems to be an uptick now.

The number of new listings rose in both 2013 and 2014, and the overall quality has improved. Notable recent arrivals have included Fever-Tree Drinks, the maker of posh mixers, which was valued at £154m, and car dealer Marshall Motors, whose April initial public offering valued it at £115m.

"Aim is a market for growth companies, so it will always attract the investment fad of the day. But there has been a rise in the number of larger, more established and credible businesses and that is good for the market," said Richard Power, head of smaller companies at Octopus Investments.

Is this driven by tax advantages?

Many (though not all) shares traded on Aim qualify for business property relief, meaning that once held for two years, they can be bequeathed free of inheritance tax. Since 2013, they have also been eligible for inclusion in Isas, and in 2014 they became exempt from stamp duty on equity purchases.

"The tax changes were well made to coincide with a pick-up in investor activity and an increase in risk appetite," said Mr Power, noting that Aim floats are quicker and cheaper for companies than obtaining a main market listing.

Will this improve overall performance?

The average Aim IPO in 2014 returned 9 per cent, according to the stock exchange. But it will be some time before we know whether Aim's dismal long-term record is improving. From inception to the end of 2014, the Aim all share index has delivered a negative return of 1.6 per cent a year. "It is still a stockpicker's market. But the pool of quality companies is getting bigger," said Mr Power.

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