A Steady Aim

When it launched in 1995, the London Stock Exchange’s Alternative Investment Market (AIM) opened a source of capital to smaller U.K.-based companies in the public trading arena. That mission seems even more important today. The major indexes, such as the New York Stock Exchange (NYSE), the National Association of Securities Dealers Automated Quotation System (Nasdaq), and the The Financial Times and London Stock Exchange–owned FTSE financial indices, are dominated by massive, larger-cap companies. Businesses seeking to raise less than $75 million can be dissuaded from pursuing a listing on the bigger exchanges by uninterested Wall Street bankers, says Mike McKee, a partner at the Bloomington office of accounting firm Virchow Krause & Company.

On March 18, financial services giant Visa, Inc., raised $18 billion in its initial public offering (IPO) on the NYSE. But where should companies in the earlier stages of growth go to raise capital? The AIM has had success in drawing investment to small- and micro-cap companies before they hit the big time. To be listed on the AIM, firms don’t have to be incorporated in the United Kingdom, and they can trade in any freely available currency.

Going Abroad

In 2003, there were just over 700 companies listed on the AIM. Only seven of them were American, and no companies from Minnesota were listed. In 2004, companies outside the United Kingdom started knocking and 355 were admitted. The following year, 500 more companies joined, and 460 joined in 2006. “We’ve about 1,700 companies on the AIM right now,” says Paul Watts, a partner with the London-based accounting firm Baker Tilly. “About one-third are based outside the U.K.”

Watts visited the United States in February to discuss the London Stock Exchange and AIM with interested businesses in the Midwest. In Minnesota, he worked with McKee because Virchow Krause is part of Baker Tilly International’s network of independent accounting firms. For six months, McKee has been working with a Minnesota firm that he can’t name in preparation for listing on the AIM in July—a first for Minnesota business.

“The U.S. is the largest overseas component [of AIM’s international listings],” Watts says. “The basic statistics . . . say there are about 50 American companies, but if you add in all the other businesses that maybe have BVI [British Virgin Islands] or Bermuda as a holding company [location], the actual number is about 75,” he says, noting that these companies are often American owned.