Since the advent of Sarbanes-Oxley and the continuing success of London’s AIM market, it has become fashionable to talk of the decline of the American public markets as a listing destination. This talk of a migration of public offerings away from the US-based security exchanges has even been notice by Wall Street.

The desirability of the US as place to float has been called into serious question. AIM has 300 foreign companies listed there, with 2006 witnessing 72 international IPOs raising £2.7bn. Gareth Healy, a director at Close Brothers, said last year that “the demand for AIM listings from US 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 US companies seeking to investigate an AIM IPO”.

AIM is attractive to overseas companies as it has fewer regulatory and listing requirements than many international markets, listing can be completed quickly, acquiring other companies is quick and relatively easy, and it provides issuers with a deep pool of liquidity. AIM has established itself as, arguably, the most attractive market for high growth overseas companies.

However, there have been a few dissenting voices, the loudest being John Thain, the chief of the New York Stock Exchange, who described AIM as a market that does “not have any standards at all and anyone [can] list”. In 2006 fewer companies listed than in 2005, although it raised a record £15.7bn in new and further issues. The market also rose by just 0.8%, compared to the 27% experienced by the FTSE 250 and the 11% by the FTSE 100.

The idea that companies are turning their back on the US markets has also been called into question by new data from Thomson Financial, the owners of EVCJ. The company has produced a report – called ‘Making It In The USA: Foreign IPO Issuers Continue To Flock To US-Based Exchanges’ – that investigate if there has indeed been a movement of foreign issuers away from the US market and, secondly, if the dollar volume of foreign issuers listing shares in this marketplace has shifted to any degree since the adoption of Sarbanes-Oxley legislation. The results of this study could provide important evidence to the argument of whether US-based exchanges lack appeal to foreign issuers.

As seen from the table featured on this page, there remains a strong showing from foreign issuers pricing shares in the US market. In 2006, over 16% of the number of IPOs priced in the US was by foreign-based firms. That’s the highest proportion of foreign IPOs pricing in the US in this 20-year period covered by the report. Secondly, in terms of dollars raised, foreign IPO activity accounted for over US$10.5bn of 2006’s US$45.3bn in initial public offerings priced in the US. That translates into a 23.4% share of IPO volume sold in the US last year, the highest level since 1994 when 23.5% of the proceeds of IPOs sold in US were from non-US companies. Also, the US$10.5bn in foreign IPO activity in the US market last year stands as the second highest dollar volume in the 20-year timeframe. The only other time when there was a higher dollar volume that last year was back in 1996 when US$11.4bn in proceeds from foreign issuers was completed.

Since the adoption of Sarbanes-Oxley legislation in July 2002, there has been little evidence that foreign issuer IPOs have been shying away from the US market. Last year’s total of 34 foreign companies pricing IPOs in the US market matched 2005’s level and is at the highest level since the enactment of the law.

Based upon this review, it appears that foreign issuers pricing IPOs are finding US markets an attractive haven. While it is true that many state-owned entities, particularly Russia and China, have raised several billion dollars from securities offerings on non-US exchanges, the evidence above clearly illustrates that the US market remains an inviting locale for IPOs by both domestic and foreign issuers.


Using SDC Platinum’s New Issues database, Thomson Financial (TF) selected initial public offerings priced in the US marketplace, by both domestic and foreign issuers, for the 20-year period 1987 to 2006. Next, as is the norm for identifying operating companies, investment funds and closed-end funds were excluded. To identify those IPOs by foreign issuers TF used the appropriate flag for nation issuer and excluded US-based companies. Once the annual count of foreign company IPOs priced in the US was tallied, TF calculated that volume relative to overall IPO activity in the US marketplace.