Corporate Finance: firms primed to receive further work on acquisitions and disposals

The Alternative Investment Market (AIM) had a record year in 2005, as a surge of international companies joined the market, and corporate finance lawyers predict the strong run will continue well into 2006.


London Stock Exchange figures show that by the end of November 2005, 352 companies had joined AIM during the year. With a month to go, this was already an increase on the 294 admitted in 2004 - itself a record-breaking year.


Of the new arrivals, 99 were international companies, almost doubling the number on the market to 203.


Some 1,351 companies are now listed on AIM, with a total market value of £51 billion. This represents an increase of almost £20 billion compared to the previous year.


Richard Hildebrand, a corporate finance partner at City firm Trowers & Hamlins, said the international dimension to the junior market is greater even than the statistics suggest - many AIM companies are registered as UK plcs but their underlying businesses are based entirely overseas.


Mr Hildebrand, who has just returned from a roadshow promoting the market to countries in the Gulf, said although local lawyers would continue to handle AIM-listed international companies' day-to-day legal work, their UK advisers could expect additional instructions on secondary issues, regulatory matters and international acquisitions and disposals.


He added: 'The combination is right for London. It has lighter regulation, a strong financial centre and a successful junior market. I see no evidence of a slowdown - in fact the opposite. We are seeing interest from companies in countries where traditionally there has been no interest in AIM.'


Nick Davis, a finance partner at City firm Memery Crystal, said there had been a considerable increase in the number of US companies listing on the market in 2005, as well as firms from Canada and Israel.


He said: 'AIM has become the market of choice for worldwide growth companies. US companies in particular have not got a market that caters for companies of the size of your average AIM company. The Sarbanes-Oxley legislation has driven US companies away from the US markets, and the UK has benefited.


'Israeli companies may traditionally have gone to the US, but they are finding their way to AIM for the same reasons. Australia is still strong, and we are also seeing the "China effect", with Chinese companies listing as a result of the economic boom in China, often listing through UK holding companies.'


Mr Davis added that the increasing involvement of major institutional investment banks such as JP Morgan and Merrill Lynch had given further impetus to AIM's growth.