In the first quarter of 2006, 21 foreign businesses launched an IPO on the London’s Alternative Investment Market (AIM). The number has climbed steadily over last year, signalling the AIM’s increasing attractiveness to foreign businesses.
According to Close Brothers, four of the companies that listed were from the US, two from Canada and two from Israel. Some might argue that these listings reflect the market’s newfound ability to outshine the Nasdaq. Ireland and Australia also floated two companies each on AIM, with the Cayman Islands floating two and the British Virgin Islands listing three.
Gareth Healy, a director at Close Brothers cited that there may be certain “push factors” at play. He notes, “The demand for AIM listings from U.S. companies is being spurred by the Sarbanes-Oxley regulation, the high cost of a listing and the large minimum size for an effective IPO in the US. For many companies, AIM is now the new Nasdaq. Although few have actually listed yet, we are increasingly approached by U.S. companies seeking to investigate an AIM IPO.”
Reflecting this new appreciation for the AIM is the total volume of capital being listed. Overseas companies raised £839m in Q1 2006 on AIM, a 707% increase from the £104m raised in Q1 2005.
Healy, meanwhile, isn’t expecting any let-up in the growing momentum. “There were reservations at the start of 2006 as to whether the IPO window would remain open after such a strong finish to last year, and also with potential negative macro-economic influences on the horizon,” he says. “But with the stock market still riding high, we expect an increase in the number of overseas companies listing in London throughout 2006.” – T.A.