The Alternative Investment Market (AIM), the junior market of the London Stock Exchange

As of year-end 2005, about 1,400 companies were listed on AIM. Of these, 220 were non-UK companies from 25 countries -- the first Chinese listing took place in spring 2005. There are 29 US companies, of which 20 were added in 2005.

Through the first quarter of 2006, the pace of listing has accelerated and, barring malign macro-economic influences, 2006 promises to add more than the 500 companies admitted to the market in 2005. In particular, 2006 is likely to be a year in which a record number of US companies trek across the pond for a listing.


There are several excellent reasons for the high degree of interest in AIM today:

1. The institution itself and the companies who represent it have made serious efforts to spread the word in the US. Many recent industry conferences have featured a speaker talking about the merits of the market.

2. In a relatively constrained venture market, AIM offers an interesting alternative to a second or third round financing. This is particularly true if your market is not well served by proximity to venture capital. AIM is not geographically constrained by the “two hour rule” which governs the thinking of much of the venture world.

3. Entry is relatively straightforward which is reflected in its associated timing -- four months from beginning to end. A comparison might be the length of an average venture capital raise -- nine months.

4. Then there’s the light hand of post listing regulation and semi-annual interface with the City as opposed to the quarterly treadmill here in the US.

5. Finally, there’s the high likelihood that a small company’s voice will be heard on an ongoing basis, post-listing. You stand a better chance of not being relegated to the sidelines by much larger, better promoted companies. In fact, specialist financial PR firms are available at relatively modest cost to ensure that your voice is heard. This is probably the most compelling answer, regulation aside, to the ‘why not NASDAQ question’.

6. And, let’s not forget the buzz -- the stories that gather currency and fuel the fire. For example, did you hear about the company that listed on AIM with a 10 million pound raise at a valuation of over 45 million pounds with just a couple of patents and a good management team? (This last is true and unusual: a distant outlier from the norm where sales and profitability are evidenced.)

When AIM opened for business in 1995 it was the preserve of discretionary private client stockbrokers who afforded their clients the opportunity to roll the dice on young companies. Those investors are still there, but today AIM is predominantly an institutional investors market.

Most AIM companies have market capitalizations between $10 and $100 million. By contrast, the average size of a NASDAQ IPO last year was $290 million. Average proceeds from an AIM listing run around $10 million.


Getting Started: First Find a NOMAD

The first step is to contact a NOMAD.

A NOMAD is a nominated adviser whose role it is to introduce your company to the market, advising you on the admission itself and your ongoing obligations.


Since this is an ongoing relationship, it requires some care and comparison among alternatives before making a choice. You also will need a broker who will work with you to ensure an appropriate market for the company’s shares. Again, this relationship is ongoing. More often than not, the NOMAD and the broker will be from the same firm -- separated by the traditional Chinese wall.

AIM Listings Require a UK or International Presence

In thinking about suitability for a listing, it is important to think about the attractiveness of the company to a UK investor. Ideally, you will have a ‘UK story’ to tell -- a growing UK division ready to expand organically or acquisition plans to grow in the UK, perhaps to consolidate an industry. At least, you should have an international story -- “our biomass technology has been installed in Australia, three European countries, and we have plans to build in Asia.”

http://www.focusbankers.com/publications/newsletter_2006_may.asp