AIM is the London Stock Exchange’s international market for smaller growing companies. A wide range of businesses including early stage, venture capital backed as well as more established companies join AIM seeking access to growth capital

London (Business Review Europe) | Since its launch in 1995, AIM, the London Stock Exchange’s market for small and growing companies, has helped thousands of ambitious companies raise the capital they need to fund their expansion and development. AIM has become a magnet for enterprise, attracting dynamic companies from around the world. AIM’s success has helped position London as the world’s capital market, where international companies seek to benefit from London’s core strengths; our international focus; our high standards of regulation; and the deep pools of capital available.

AIM, remains the only growth market in the world with the critical mass to provide firms from a wide range of countries and sectors with access to capital throughout their life on the market. While global IPO markets are currently quiet, AIM is very much open for business, allowing companies to continue to raise significant sums of money.

It is one of AIM’s strengths that unlike other growth markets it is not simply a market for raising money at IPO. Once quoted, AIM companies can return to the market to access further funds, to help them continue to develop and grow their business.

Many of AIM’s 400-odd energy companies featured prominently on the list of firms conducting further issues last year. Firms such as Dominion Petroleum, Afren and Peter Hambro Mining [now Petropavlovsk] all raised in excess of £50 million on AIM in 2009, the latter now having moved to the Main Market. The fact that in total in 2009 AIM companies succeeded in raising over £4.7 billion through further issues demonstrates how interest in small and mid cap companies among London’s unrivalled suite of small cap investors remains strong.

The list of companies raising money through further issues in 2009 demonstrates the unrivalled diversity of the investors and analysts who make up the AIM community, who last year supported fundraisings from over 80 different sectors. The market has always welcomed companies from a broad range of industries, from energy companies to medical solutions firms. This sectoral diversity remains one of AIM’s strengths and has helped the market to survive market conditions which have historically seen other growth markets fail.

With London a leading financial centre for global natural resources companies it should come as no surprise that mining and oil and gas today remain the two largest sectors by market capitalisation on AIM, worth £8.5 billion and £8.2 billion respectively. However, the list of companies joining AIM, and the market’s make-up often shifts naturally towards new sectors that are also in demand with investors. Cleantech, for instance, has gained significant attention over the last few years.

Driven by strong fundamentals, including high energy demand, the clean energy sector has attracted multi-billion investments globally. Although public market activity for cleantech companies is still in its infancy, there are now around 100 cleantech firms on AIM, including companies such as Clipper Windpower and Renesola. Last year FTSE introduced new indices – including the FTSE Environmental Opportunities UK AIM Index – designed to help investors identify and again exposure to firms in the renewable energy sector.

Whichever sector or AIM company investors choose to back, their investment in AIM is one in the real economy, with over 1000 UK-incorporated AIM companies today alone employing around 255,000 people. Over the coming years investors in AIM can look forward to yet more innovative firms coming to market. Despite the global new issues market remaining subdued, arrivals last year such as India Energy, Max Property Group and Better Capital, are testament to the market’s continuing attractiveness to new companies. The pipeline of companies with exciting growth stories and seeking a flotation in London remains strong.

Another trend that looks set to continue over the coming year is that of AIM companies moving to the Main Market as the next logical step in their growth. The miner Centamin Egypt was one of 9 companies to transfer from AIM to the Main Market in 2009, having successfully grown from a market capitalisation of £21.5 million on admission to AIM in 2001 to over £1 billion today.

One of the key reasons why AIM companies such as Centamin are able to flourish and grow is the market’s unique regulatory system. AIM’s regulatory framework is based on balancing the needs of growing companies with appropriate levels of investor protection.

The Exchange is not standing still in its efforts to promote the benefits of AIM and help companies make the most of their AIM quotation. One area where we’ve been focussing our attention is urging the Government to give Venture Capital Trusts greater freedom in the investments they make in smaller quoted companies.

We are pleased that it was announced in the last Budget that the Government will consult on allowing AIM shares to be eligible for inclusion in ISAs and modifying the Venture Capital Trust rules. These very promising signs reflect the constructive dialogue we and others, have been engaged in with Government departments , and we are delighted at the increased recognition among policy makers of the importance of SMEs to economic growth.

The importance of extending visibility and developing liquidity has undoubtedly increased as companies have experienced depressed valuations. We are in regular dialogue with companies, through forums such as our recent programme of regional roadshows, to ensure that we are providing them with the tools they need to help them communicate with investors. For instance we’ve been encouraging the wider take-up of equity research, having supported the launch of an additional research service – PSQ Analytics, which recently published a research report on the renewable energy sector, profiling AIM’s cleantech companies.

We are also working closely with the Market Making community to develop greater liquidity in AIM and Main Market securities. Having already introduced market maker trading incentives, we are continuing to ensure that companies are traded on the optimal service and have transferred a number of companies from our SETS electronic order-driven service to SETSqx, a hybrid model which combines the existing market maker quote-driven model with orderdriven functionality.

Looking to the future, the Exchange is committed to providing small and medium-sized companies in the UK and abroad with the capital they need for expansion. The fundamentals of AIM remain strong and I firmly believe that the market’s structure, specially designed to meet the needs of small and mediumsized companies, will continue to create a compelling offering.