King & Spalding see 2010 as a year of significant opportunity as the markets stabilise.

London (dofonline) | AIM has been perceived to be in the doldrums of late.

However, with the markets (slowly) re opening following the global recession, activity on AIM is increasing, more quickly than activity on the main market.

In common with stock markets globally, the last two years have seen a dramatic fall in investment activity on the AIM Market.

IPO activity, in particular, has been extremely subdued, with investors being cautious and slow to invest, and where investments have been made, these have tended to be at the conservative end of the risk scale, with investors reluctant to commit to investments with a more varied risk profile.

More recently, we have seen something of a change in investor sentiment. Investors seem now to be emerging with a far stronger appetite for new deals, across the spectrum.

Investors and the funds they represent have seen little investment activity for almost two years and it’s understandable that, with renewed confidence, rising markets and greater stability, investors wish to put their funds to work again. This evidence is reflected in the increase in fundraising activity on the AIM market, as well as an increasing flow of announced IPOs.

AIM is not appropriate for all companies – it is not for the desperate, its not an easy option or an alternative of last resort.

It is, however, the most attractive of the available alternatives for businesses that fit the market – small to medium sized businesses (not start up or very early stage) with strong growth potential seeking access to institutional capital.

With strategic lending by banks continuing to prove elusive, and private equity/venture capital funding still patchy (except for very large transactions), AIM continues to represent an attractive option for companies seeking to raise finance.

Once listed, AIM provides a company with access to one of the deepest pools of institutional capital of any market, with follow on fundraisings being straightforward, cost effective and quick (can be done in a week), with no further approval, filing, or registration requirement, a simple process – a key attraction for a growth company.

AIM has also proved to be a viable intermediate step to a listing on the official list of the London Stock Exchange.

Three companies in May 2010 ‘stepped up’, including Sportingbet plc and Great Eastern Energy Corporation Limited.

An increasing pipeline of IPOs is now in train, with companies from a broad range of sectors and jurisdictions set to join AIM, taking advantage of a return of investor appetite. The amount of funds being raised on AIM is rising strongly again.

$8.8 billion was raised across the whole of 2009, a 25% increase over 2008, and the fourth highest amount ever raised since AIM was formed.

Follow on fundraisings, for which AIM is renowned, increased by nearly 50% in 2009 compared to 2008 and the AIM All Share Index has risen by 75% from its low in 2009.

27 new companies joined AIM in the first 4 months of 2010, raising a total of approximately £325 million.

Over £1.5 billion has been raised in the year to date by existing AIM companies, with £426 million raised in May alone.

King & Spalding see 2010 as a year of significant opportunity as the markets stabilise. We would be happy to discuss a possible AIM strategy for your company