Activity on AIM trebles as market hits critical mass

Companies are increasingly turning to the Alternative Investment Market (AIM) because it has a lighter regulatory touch and its stocks are increasing in value, lawyers said this week after it emerged that AIM activity has more than trebled this year compared to last.

The first quarter of 2004 generated 45 AIM initial public offerings (IPOs), raising 533 million.

During the same period last year, only nine IPOs were completed, raising 7.5 million.

The amount raised in the first quarter of this year exceeds the entire sum raised on AIM during 2002 - 490 million - and is almost as much as that raised during 2001, 593 million.

Russell Carmedy, head of the corporate department at US/UK firm Jones Day, said: 'What one is seeing is an environment where mid-sized company stocks are attractive to investors because they see more growth.

And these companies are on AIM.'

He said the full London Stock Exchange list had been dogged by sluggish performance and a lack of confidence - exemplified by recent difficulties at blue-chip companies such as Shell and Marks & Spencer.

Mr Carmedy said that once listed, AIM companies benefit from a less onerous regulatory regime, but added that the process of advising on AIM listings is no less burdensome than that for fully listed companies.

Hugh Maule, a partner in the finance department of Lawrence Graham, said: 'I think it's got to such a level because [AIM] has reached a critical mass.

There are now around 760 companies on AIM so it is inevitable that companies with a market capitalisation of up to 500 million might choose AIM over the full list.'

He said investment banks advise clients who are looking to float that they have a choice, 'whereas four years ago it wasn't as obvious as that.

Brokers are now telling their clients that AIM is a more flexible market'.

Jeremy Fleming