The Alternative Investment Market (AIM) of the London Stock Exchange (LSE) has gained wide popularity and has caught the fancy of many small and medium enterprises (SMEs) throughout the world as an alternate avenue for raising capital. With growing integration and close co-operation among global financial institutions and capital markets, Indian companies too have joined the party and are looking at AIM as an attractive market for their capital mobilisation plans. Since its launch in 1995, over 2,600 companies from various industrial sectors across the globe have joined AIM.

So far, there are about 25 Indian companies listed on AIM, including Eros International, Hardy Oil & Gas, Hirco, Unitech Corporate Parks, Promethian India, Trinity Capital, KSK Power Venture and Ishaan Real Estate among others. The total market cap of these 25 Indian companies as on April 30, 2007 was around GBP 3 billion. The question is why are Indian companies flocking to AIM when there is a robust, booming and vibrant capital market in India, catering to the needs of sectors across industries unlike other emerging markets. More importantly, the Indian capital market is one of the best globally in terms of corporate governance and transparency issues, helping India in receiving large amount of portfolio investments compared to other emerging markets.

The proponents of AIM are citing the same reasons when arguing for Indian companies to approach AIM to raise funds. Many SMEs, which require growth capital, may not be able to adhere to the strict regulatory environment in India and hence see AIM as an alternative platform to raise funds that offers wide flexibility. The main advantages of AIM are its lower entry and maintenance requirements for listed companies. For instance, there is no need for a trading record, minimum shares don’t have to be put in public hands, prior shareholder approval isn’t necessary for transactions and no minimum market capitalisation is required.

According to Girish Nadakarni, executive director, institutional sales, IL&FS Investmart, "Indian companies approach AIM as they are able to get better valuation in certain sectors which they are not able to get in India. Each company gets listed on AIM on a structural basis according to their own needs and requirements. There has been a strong need for an alternative trading platform for SMEs domestically but lack of it is prompting more and more Indian SMEs to opt for foreign listing and hence policy makers should look into the Indian alternative of AIM."

Mr. Neeraj Sharma

Neeraj Electronics

CEO, Neeraj Electronics
Jorhat, India

Free Member, Joined :06/09/2007
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