AIM remains IPO favourite

Last year saw AIM adopt a number of new rules and regulations and according to The Taking AIM Survey 2008, undertaken by Baker Tilly in partnership with Faegre & Benson, the recent tightening of the AIM rules has generally been welcomed as a sensible move.

The survey involved 200 companies currently quoted on AIM, 50 private companies and 50 institutional investors actively investing in companies listed on AIM. Of the 200 companies listed on AIM, 60 are overseas companies and 140 are UK companies.

The majority of AIM companies agreed that tighter regulation has had a positive effect on new listings and been beneficial to the market’s performance and investor confidence. The Taking AIM 2008 research concluded that two thirds of AIM companies found the self-regulation effective and has attracted, rather than deterred, new investors.

Despite the tighter regulations, AIM is still considered to have a light regulatory touch. A large majority of investors (74%) disagree that low regulation means low performance, however, (54%) believe that increases in the regulation of AIM is still necessary. Most of the AIM companies (85%) agree that these regulations have had a positive effect on new listings and been beneficial to the market’s performance and investor confidence.

The Taking AIM survey 2008 also found that the general standard of corporate governance among AIM companies is a huge improvement from last year (58% up from 33% in last year’s Taking AIM survey).

AIM companies are nevertheless finding compliance more burdensome, with 60% of AIM companies considering the obligations of being an AIM listed PLC to be onerous – the highest figure since 2005.

Looking ahead in 2008, investors in AIM companies were gloomy about investment prospects for the year, but predicted that companies in the resources, oil and gas, and mining sectors would show the strongest growth. Meanwhile, the technology sector, which was favoured by those investors surveyed for last year’s Taking AIM research, has dropped to the bottom of the list of favoured sectors for this year. The fund managers’ pessimism was mainly driven by the uncertainty in global markets. However, some investors said the increased capital gains tax for investors in start-up companies, the general fall in business confidence, and the switch by investors to the perceived safety of bigger companies would also have a negative impact on AIM.

Melanie Wadsworth, a corporate partner at Faegre & Benson said: “AIM’s lighter regulatory touch has always been seen as one of its fundamental strengths and is intended to balance the requirement of a small growing company with protection required for investors. Despite negative press from various quarters about AIM, it remains a fast growing equity market.”