Alternative Investment Market is one decade old and going strong |
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Published
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Mon, 20 Jun 2005 09:50
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The Alternative Investment Market has completed a decade of existence. After what has been a topsy-turvy 10 years, the AIM is now looking ahead with confidence as London is now beginning to attract investors who see it as an attractive location.
The AIM has been tagged the most successful small to medium cap market in the world by Baker Tilly, the accountants. But this does not mean that it will all be roses from now on. Some changes that are bound to come in could keep investors away. One of the most discussed is the possible change in attractive tax breaks available only to investors in AIM companies. The volatility that continues to rule the oil market is also a cause for concern.
| AIM was initially floated as a market that would offer less stringent regulation. This was underlined by the fact that on the first business day, there were just 10 companies that were listed, Peter Brown, chairman of one of them, the newspaper and book distributor Dawson Holdings, recalls, “Like a lot of companies, we had a very big family shareholding. We used the listing to straighten out the shareholder base and turn it into a proper, fully owned public company.” These 10 companies were playfully called the “Threadneedle Ten” after the address of the Stock Exchange at that time. The total value of these companies was just £82 million. It soon grew to £13.5 billion in 1999 at the height of the dot-com boom. Today, almost 1,216 companies valued at more than £35 billion are quoted there. It is just as likely to be the first address where small companies list before moving on to bigger things.
AIM's chief, Martin Graham, was a happy man at the completion of a successful decade. He said that the failure rate for companies since the market's inception in 1995 ran at just 3 percent, "Our job is to make sure that we have very high standards of disclosure at least comparable to the main market. Once people understand all the facts then its up to the investor whether to buy or sell," Graham said. He also said that the AIM had listed 144 companies; almost double the number from last year. However, Graham said that AIM would proceed cautiously on that front, “We have to be very careful that as we internationalize we actually increase the quality of the market. I could get 100 Chinese or Indian companies tomorrow, but that wouldn’t’ necessarily be the right thing to do,” he stressed.
Catherine Stanley, manager of F&C UK Smaller Companies and F&C AIM Growth funds, commented, "The more robust requirement of a minimum three-year trading record, higher standards of corporate governance and a minimum free float of 25 percent gives investors in these companies greater peace of mind. As AIM carries on developing and as there are increasing numbers of these (overseas) companies there will be more discussion about how much of your portfolio would you want in some of these specific overseas plays."
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