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CAPITAL MARKETS

AIM: Aiming higher or staying put?

Graduation day might be approaching for some of the larger companies listed on London’s AIM (Alternative Investment Market) but the sheer volume of competitors means some might not make the cut.

There are signs that the tendency for smaller companies to move to an AIM listing might be reversing but the process of migrating to the stricter regulatory requirements of the main London market is not without risk. Some fund managers say that some of AIM’s finest are ready to step up to the London Stock Exchange, but is this really the start of a new trend?

In 2005, 40 companies moved from the main market to AIM, whereas only a few moved the other way. Now, according to fund managers F&C, this may be about to change.

“AIM’s flexible listing requirements and the favourable capital gains tax treatment of AIM shares has made it particularly popular for owner-entrepreneurs seeking to raise capital,” says Catherine Stanley, manager of the F&C UK smaller companies fund. “However, we are starting to see increasing numbers of AIM companies with market capitalization of over £100 million [$190 million] exploring the possibility of fully listing on the London Stock Exchange. These are not companies at the speculative end of the scale but established and profitable cash-generative businesses. Connaught, a company specializing in social housing maintenance work, has announced that it will be moving to the full list by the end of the year.

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