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However, the market remains tiny. The combined market capitalisation of all the companies listed on AIM is only about £14 billion. That is the same size as top supermarket Tesco (LSE: TSCO), currently the 21st largest company in the country by market value. This means the average size of an AIM company is about £33m, pretty insignificant in the general scheme of things.
Since it was set up in 1995, events have rather overtaken AIM. Back then, the rules a company had to meet in order to float on the main London market were far more stringent that they are today. An aspirant group needed a three year trading record and had to have at least 25% of its shares in public hands following the flotation. AIM was relaxed these essential rules, providing a stepping stone to the full list.
However, the advent of entrepreneurial Internet start-ups such as Freeserve (LSE: FRE) dramatically changed the scene. Electrical retailer Dixons (LSE: DXNS) wanted to spin off its fledgling Internet access provider last summer. The problem was that Freeserve had only been trading for less than a year and Dixons was only prepared to sell off 20% of its stake.
Surely then the company could only float on AIM? This seemed ridiculous to many market observers, since at that stage AIM had picked up a reputation as a sleepy backwater for small cap stocks. Rather than lose the country's leading Internet company to Nasdaq, the London Stock Exchange agreed to relax its rules and the rest is history. Since then young technology enterprises have joined the main market straight away.
The formation of the techMARK last Autumn put the official Stock Exchange stamp on these changes. Any company with an initial value of more than £50m could join the official list immediately and by-pass AIM. This reinforced AIM's reputation as a small-cap sideshow rather than a thrusting technology market.
Nevertheless the hi-tech companies already listed on AIM, such as Internet investment bank Durlacher (LSE: DUC) and photonics company BATM (LSE: BVC), soared magnificently before moving to the main market's techMARK index. This helped the AIM index rise nearly 200% in the nine months from last June to the beginning of March. However, since then the index has come back down 40%.
More worrying still though is that AIM's relevance looks set to be eroded even further by the proposed merger of the London Stock Exchange with the Deutshce Borse to create iX. This will focus on creating a common trading platform for blue chip companies and a pan-European hi-tech market. If these plans are carried out then even more than before AIM will become a small-cap graveyard.
What then for solid companies such as retailer Majestic Wine (LSE: MJW), which reported another sparkling set of figures this morning with per-tax profits up 28% to £4.5m on turnover ahead 19% to £81m? Unless enough interest can be created in such groups, they might well consider taking themselves private, as this Fool's Eye View explains. Otherwise what point is there in being a public company, with all the hassles and responsibilities keeping a listing involves?
Feel free to have your say on the Fool's Eye View discussion board.
Related links
• Aiming Sky High Special
• Small and Ignored Fool's Eye View
• iX Step One Fool's Eye View
• techMARK, no markET at all Fool's Eye View