Blinkx pops on AIM, more to come?

London’s Alternative Investments Market, broadly viewed as a venue for companies too small for Nasdaq, has proved that it can also be a place for chartbuster IPOs.

Last week, video search engine company Blinkx saw its share price rise 40% in first-day trading on AIM, generating a market capitalization of more than $300 million. The company, with offices in San Francisco and London, raised just under $50 million in the offering, which Blinkx CEO Suranga Chandratillake described in a written statement as “strongly oversubscribed.”

Blinkx performance was somewhat of an anomaly among issuers on AIM, which markets itself as a place for raising financing rather than securing the sort of exit that commonly follows an IPO on a more established exchange in the United States.

Chandratillake attributed the IPO’s reception to investor interest in Internet video plays.

“Judging from the level of corporate activity among the large Internet and content brands in the U.S. and internationally, it is clear to us at this stage that video is the Web’s next area for significant investment and development,” Chandratillake said in the statement.

The offering comes as new issue activity on AIM slows down in comparison to the peak volumes reached in 2005 and early 2006. A total of 395 companies completed IPOs on AIM in the 12-month period ended March 31, down from 510 during the previous fiscal year, the London Stock Exchange disclosed in its annual report. In the first four months of 2007, 52 companies completed IPOs on AIM.

Share price gains have also been scarcer. While leading U.S. indexes posted gains in 2006, AIM saw a loss in market capitalization. U.S. venture-backed companies, meanwhile, have largely shied away from AIM IPOs, with a few exceptions. BurstMedia, a seller of advertising for Web publishers, joined AIM in April 2006.

Its shares traded as high as about $1.75 and stood at about 48 cents last week, giving the company a market cap of about $36 million. BurstMedia previously raised $18 million in venture funding from Summit Partners and other backers, according to Thomson Financial (publisher of PE Week).

Protonex Technology, a developer of fuel cell power systems, listed in July after raising its first funding round in 2004 from investors that include Conduit Ventures, SAS Investors, Solstice Capital and Commons Capital. The company raised $16 million through the offering and generated a market capitalization of $68 million. Shares initially priced at about $1.70 and were trading last week at about $1.85.

This year, most venture capitalists expect portfolio companies considering an IPO to take a look at foreign exchanges, according to a December survey by the National Venture Capital Association. Nearly 60% of those surveyed said foreign exchanges would be more attractive as an IPO option for their portfolio companies, while less than 30% disagreed, because Sarbanes-Oxley has made it more expensive to go public in the United States.