If your rising company needs money to grow, and sufficient venture capital or private equity isn't available -- at least on terms you are willing to pay -- an initial public offering on London's international market for small-cap companies, the Alternative Investment Market, or AIM, could be the right strategic move.
AIM provides growing companies a flourishing marketplace and access to London's deep pool of international investment capital, the largest in Europe and second only to New York. Owned and regulated by the London Stock Exchange, AIM gives companies entry to a public market at an early stage in their development with straightforward and relatively easy admission criteria. According to a recent report cited in The New York Times, AIM has become a market of choice for small companies seeking development or expansion finance.
Emergence of AIM
In recent years AIM has expanded rapidly. From 10 companies listed when AIM was founded in 1995, the market has grown to more than 1,200 companies listed today. In 2004, 335 new companies were listed on AIM, more than double the number in 2003. The market value of AIM companies is now more than $71 billion. And AIM has evolved from being a market mainly for private investors with a tolerance for high risk to one that today draws half its investment base from institutions.
AIM seeks to attract in particular companies whose businesses are intrinsically international, no matter where they may be incorporated or headquartered. This includes companies in the technology, gaming, natural resources and life sciences sectors. San Diego's pharmaceutical and biotechnology companies should take note: As of June 2005, AIM listed 43 companies in these sectors with a combined market value of more than $3 billion.
Unlike most other markets, AIM does not require an applicant company to demonstrate a trading history, have a minimum number of publicly held shares or a minimum market capitalization. (The Nasdaq Small-Cap Market, for example, has minimum criteria for each of these areas.)
Instead, all AIM applicants must be sponsored by (and retain at all times) a nominated adviser, or "nomad," selected from a list of corporate finance and accounting firms approved by the London Stock Exchange, a list that includes many of the world's largest investment banks such as Goldman Sachs (NYSE: GS), Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER). The nomad carries out extensive due diligence to assess whether the company is "appropriate" for AIM -- in effect vouching that the company's reports are factual and its business prospects viable. The nomad also assists the company through the application process, and is responsible for advising and guiding the company's directors on compliance with AIM rules and disclosure obligations on an ongoing basis.
The other admission requirements are similarly straightforward. Each company must: