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FOR
INDIAN
COMPANIES - LISTING ON AIMLONDONS ALTERNATIVE MARKET
- Rajesh Sivaswamy
Senior Partner
rajesh@ksandk.com
With India emerging as a success story, foreign investors are looking for opportunities
to invest in Indian firms. Many of these small companies , which were earlier finding it
difficult to raise funds abroad, are now riding the trend of demands for equity shares from
Indian firms in the global market to access cheap capital. There are various options now
available for Indian companies to raise funds overseas. This article focuses on the
opportunities that the AIM, the alternative market of the London Stock Exchange has
thrown up to Indian companies.
PRELUDE
AIM, the alternative market of the London Stock Exchange, is the worlds leading market
for smaller, growing companies. The AIM has positioned itself as a market for small
companies since its launch in 1995. Today over 2,000 companies have chosen the AIM
and raised funds in excess of 20bn. Currently over 1,300 companies are traded on AIM
with a market capitalisation of over 47bn. The largest sector represented on AIM by
market capitalisation is natural resources with 216 companies with a capitalisation in
excess of 14bn.
RATIONALE FOR AN AIM LISTING
So why choose the AIM when there are umpteen options available to Indian companies in
terms of the NYSE, Nasdaq, etc. The reasons interalia are to be sought in the founding
principle of the AIM which has been built on simplicity and a flexible regulatory
environment and has been specifically designed for the needs of smaller companies.
Besides, an AIM listing offers a globally respected market and an easy access to a wide
pool of capital, enhanced profiling besides giving the company status and credibility. It
may be noted that many companies listed in the AIM are internationally traded
companies of repute. Another factor has been the average size of listing the AIM has an
average size of $70 million as against $1.22 billion at Nasdaq, $5.86 billion at NYSE,
$500 million at National Stock Exchange (NSE), $120 million at BSE and $990 million
at LSE.
Another factor that has invoked the interest of Indian companies has been the positioning
of AIM in terms of creating a regulatory environment. AIM has been positioned to cater
to companies from all sectors and from all parts of the world and aims to provide an
environment sufficient to maintain investor confidence but not so stringent from a
regulatory perspective such as to preclude less established companies from joining its
ranks. It may be noted that the Financial Services Authority [securities regulator in the
UK] nor the London Stock Exchange [LSE] is directly involved in overseeing the
activities and suitability for admission of AIM companies. The process of overseeing
suitability for admission of AIM has been entrusted to a nominated advisor more
commonly referred to as a nomad. It is not uncommon for a nomad to also act as the
AIM companys financial adviser and broker.
PROCESS FOR AN AIM LISTING
ISSUES
Although an AIM listing is fairly straightforward and all the necessary steps are generally
within the control of the company and its advisers there are, however, certain issues that
should be addressed and resolved early in the process.
1. Working Capital. For a company that is following the normal application
process, its directors must be able to state in the admission document that the
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This article is not legal advice. All person or entities reading this article might take
legal advice before taking any business/ commercial decision. In case, you require
any assistance in India, please write to us at info@ksandk.com or at the following
address:
King, Stubb & Kasiva,
Advocates & Attorneys,
E-66, 2nd Floor, Kalkaji
New Delhi, India 110019
Tel: +91 11 41032969
+91 11 41318190
+91 11 41318191
Fax: +91 11 41329569
2006 King Stubb & Kasiva