LONDON (Reuters) - An exodus of companies from London's Alternative Investment (AIM) market is set to accelerate into 2025, even as Britain's policymakers try to revive the country's capital markets, bankers and financial advisers to AIM companies told Reuters.

Already in 2025, Britain's Alliance Pharma agreed to sell itself to asset management firm DBAY Advisors, and online marketing firm Team Internet said it had received takeover approaches from private equity bidders.

This 30-year-old segment of the London Stock Exchange was designed to help smaller companies secure capital, with fewer listing requirements than the main market.

But now a growing number of AIM members are considering delisting or putting themselves up for sale as market valuations have slumped and changes in Britain's tax rules have made these listings less attractive.

"We are seeing an increasing number of AIM company boards who are considering their options, including running a private or public sale process, and - particularly at the larger end - there is a growing trend for AIM companies to think about a move to the main market to benefit in part from more liquidity," said Marc Jones, a managing director who focuses on M&A at Peel Hunt.

UK officials implemented a suite of listing reforms last year aimed at helping London compete with New York and the European Union after Brexit. This easing of listing rules has yet to yield any noticeable turnaround in initial public offerings (IPOs), however, which has been accompanied by a long spell of outflows from UK funds.

A total of 89 companies left the junior exchange last year, with just 18 joining. That compares with 2021 when there were just 54 departures from AIM and 66 additions.

And an estimated third of AIM companies with a market value of 50 million to 250 million pounds ($61-$305 million) are vulnerable to bids, according to Peel Hunt.

AIM stocks are trading at 30% to 40% below their 10-year average as investors have pulled out more cash from UK funds, versus a 10% to 20% discount on the FTSE 100 and 250 markets, said Graham Simpson, head of Quest Research.

"AIM disappearing would be catastrophic," said Simpson, adding it would be an admission that Britain is not interested in supporting entrepreneurs, startups and growth businesses.

Simpson blamed outflows from UK equity funds and "apathy" about investing in small UK companies given their poor performance of recent years.

UK-focused equity funds have seen 41 consecutive months of outflows, a driver of more departures from AIM, according to Panmure Liberum deputy CEO Bidhi Bhoma. At the same time, there has been a lack of IPOs to counter the departures.

"It's a UK economy issue as there is a huge amount of job creation and tax revenue which is vital to the UK economy that comes from having a vibrant AIM market," said Bhoma.

Another new recent catalyst for some of the 600-plus AIM-listed companies to exit the index is the halving of inheritance tax relief, said Peel Hunt's Jones.

Previously, owners of AIM-listed businesses were allowed full exemption from inheritance tax on their shareholdings. But in her Oct. 30 budget, finance minister Rachel Reeves halved that relief, and AIM-listed investors now face an effective tax of 20% on their holdings.

To reverse the decline, Bhoma said one solution could be mandating operators of pension schemes to allocate a minimum percentage of their assets to the UK.

Quest's Simpson suggested reinstating plans for UK tax-free savings accounts that invest in British stocks.

Many of the problems facing AIM are also being felt on the main exchange, which has seen the number of IPOs shrink and a swathe of large take-private deals in the last year. Some companies are also shifting their listings to the U.S. to achieve better valuations.

To be sure, analysts are seeing a reversal in equity flows into Europe that could stem the tide and bolster new issues in London.

"While we see green shoots, we need to fix this capital problem which exists in the UK and that in turn will then fix the IPO appetite of private companies," Bhoma said.

($1 = 0.8241 pounds)