LSE streamlines admission to AIM

The London Stock Exchange (LSE) has streamlined admission requirements to its Alternative Investment Exchange (AIM) in an effort to entice companies already listed on other exchanges to obtain a secondary listing on the alternative market.

Companies will now be able to use their annual report and most recent quarterly earnings statement as the basis for a listing on AIM, which is the LSE’s global market for small companies.

Companies are also required to have a primary listing on one of the other major exchanges, specifically the Australian Stock Exchange, Europe’s Euronext, Germany’s Deutsche Brse, the JSE Securities Exchange in South Africa, the New York Stock Exchange, Nasdaq, Sweden’s Stockholmsbrsen, the Swiss Exchange, or the Toronto Stock Exchange.

Graham Dallas, head of business development for the Americas at the LSE, says the LSE relaxed the requirements in response to market demand and open consultation. “We wanted to recognize that some companies on certain markets around the world had already been through a thorough regulatory process,” he says. “We decided to make it easier for those companies to realize the benefits of AIM.”

He stresses that other exchanges have nothing to fear from AIM: “We are not trying compete with the Toronto Stock Exchange or any of the other eight designated markets. We’re really offering AIM as a supplement to an existing listing, not as an alternative.”

AIM employs a sliding-scale admission fee that starts at 5,000 (US$8,250) and rises in proportion to market capitalization. Companies wishing to secure a secondary listing require an AIM-nominated adviser, or “nomad.” A nomad is a financial adviser approved by the LSE to handle all transactions between the company and the exchange. If a listed company is found to be without a such an advisor, its shares are immediately suspended; and if a replacement nomad is not appointed within a month of suspension, the company’s AIM listing is withdrawn. Nomads receive a retainer fee, as well as consulting and advisory fees.

A company that wishes to obtain a listing on AIM is advised to apply within 60 days of the publication of its annual report.

Companies that stand to benefit the most from an AIM listing are those with projects already in production or close to it. Others should be cautious. For example, in August 2002, Toronto-based Thistle Mining obtained a listing, hoping to raise US$5-10 million for its projects in South Africa and the Philippines (if Thistle had raised US$10 million, AIM would have taken 10%). However, Thistle could raise only 650,000 (US$1 million), or just enough to cover the costs of its listing. To date, the company’s overall market capitalization is roughly the same as it was before the AIM listing.

“Anybody thinking of listing on AIM should get together with someone who has gone through the process and go in with open eyes,” says Harvey Mackenzie, Thistle’s chief financial advisor.

Over the past year, five Canadian companies have listed on both the LSE and AIM, which means there are now 46 Canadian issuers with equity or debt listed on London’s markets with a combined market cap of more than US$110 billion.

AIM has become increasingly international since it was launched in 1995. Of the roughly 700 companies currently listed, about 50 are based outside the U.K.

AIM’s market cap is 10 billion (US$16.5 billion), and about 7 billion (US$11.5 billion) has been raised since it opened.

Details of the new rules can be found on the LSE’s web site at www.londonstockexchange.com/aim.