LSE goes European

The London Stock Exchange (LSE) is to develop AIM, its market for small growth companies, to accommodate the demand among small and medium sized companies across Europe for equity growth capital.

To achieve this, the Exchange will seek the support and commitment of the investment community in the other major European financial centres. It will develop a network of links with investors, advisors, intermediaries as well as the issuers themselves in markets across Europe.

Research conducted by Oxford Analytica, estimates that the economic benefit of a truly pan-European market for SMEs would be in the range of a 0.3% to 0.6% uplift in EU GDP.

Chris Gibson-Smith, LSE’s chairman, said: “We need to learn to allocate capital efficiently to the most active sectors of the economy – irrespective of national boundaries – especially to the smaller and medium sized companies that are responsible for two thirds of Europe’s employment and that have the capacity to grow faster and add jobs more quickly. In order to achieve that goal Europe needs further to deepen its equity culture and to support a market structure capable of delivering efficient access to capital to these companies.”

Local nominated advisers across Europe will act as a pipeline for companies coming to AIM, and local member firms will provide liquidity, ongoing research and local distribution to investors.

Almost £20bn has been raised by AIM companies since the market’s launch in 1995 and more money has been raised in the first 9 months of 2005 (£4.95bn), than in the first five years of the market’s existence.

Last year was the most successful year in AIM’s history with a total 355 new companies admitted and a total of £2.78bn raised in new issues. It was also a record year in terms of money raised in further issues: £1.88bn; total money raised: £4.66bn and total value of shares traded: £18.13bn.

These figures have already been exceeded this year. From January 2005 to the end of September a total of 389 new companies have joined AIM and a total of £3.39bn was raised in new issues.

AIM has been increasing its international profile significantly with almost double the number of international companies quoted on the market at the end of September 2005. As of October 4, there were a total of 38 companies quoted on AIM from the EEA (excluding UK) with a combined market value of £1.7bn.

Commenting on the AIM’s future plans, Michael Elias, chairman of EVCA’s High-Tech Committee and managing director, Kennet Venture Partners said: “EVCA strongly welcomes and supports this announcement by the London Stock Exchange. This is an important step towards the creation of a pan-European stock exchange that Europe’s young companies desperately need. It is now up to the financial community in Europe to act in a more coordinated way to support this initiative from AIM and for Europe’s policy makers to create the necessary conditions for this to be successful so that Europe’s companies of the future can thrive.”