The rise of AIM for US investors

By Watson, Farley & Williams’ financial services team.

The number of US companies admitted to AIM has seen a sharp upswing this year.

3 years ago there were only 5 US companies quoted on the market.

At the beginning of 2006, there were thirty or so.

Now there are more than fifty.

Limitations of US listing

What are the reasons for this increasing interest?

In the United States, Sarbanes-Oxley, the cost of going public and the virtual disappearance of the IPO market for small to mid cap companies have all provided an incentive for growing companies to look beyond their home territory in seeking expansion capital.

AIM provides an additional capital market for these companies and is an option now being actively considered and pursued by companies and their advisors across the US.

Confidence in maturing market

Historically, in the UK, there has been a tendency for the market to question the motives of US companies who have attempted to list in London.

Why would a US company come to London to raise money when the United States has the largest capital market in the world?

However, the AIM market itself has continued to mature and, as more US companies join, so the market has become more accepting of there being good reasons for US companies (particularly for those with operations outside the US) seeking to list in London rather than in their home jurisdiction.

High-growth firms target AIM

Over the last 12 months Watson, Farley and Williams has seen upwards of forty potential US AIM prospects.

While some of these are, as yet, too small for AIM, others are of a sufficient size, with a sufficiently international business and strong growth prospects to make them attractive to the market.

They are proceeding along the AIM route and others will follow.

Long-term trend

It is generally considered that any legislation changes in the US designed to soften Sarbanes-Oxley will either be some time in materialising (if at all), or that any such modifications will not alter the difficulties in terms of economic viability for small, growing companies seeking a listing.

Watson, Farley & Williams believes that more companies will continue to be steered in this direction in the future and will continue to be actively involved in pursuing this route for its US clients.