The escalating cost of raising money on AIM could drive companies into the arms of copycat markets overseas, a City law firm has warned.


Research by Trowers & Hamlins showed that the average cost of listing leapt by 58% during 2005/06 for companies raising less than £2 million. Costs for such companies now amounted to almost 40% of funds raised, although costs for larger capitalisations were much lower - starting at just 5% for listings of £20 million or more.



Trowers & Hamlins senior solicitor Charles Wilson said: 'If the process does get much more expensive, then one day we might see smaller capital raisings locked out of AIM.'



But Julian Stanier, corporate finance partner at City firm Norton Rose, said: 'AIM has done a good job of selling itself worldwide, and international companies still look to London first.'



Jonathan Rayner