Introduction to the London AIM Market
Presented by: Mehboob (Mebs) Dossa London Direct line: +44 20 7632 1627 Email: [email protected] CONFIDENTIAL London Stock Exchange (LSE)
• Main Market • AIM Market
Others: PLUS
2 CONFIDENTIAL London Stock Exchange – key statistics
Total companies Domestic: 2,228 International: 589
Market capitalisation Main Market: UK listed: US$1,681bn International listed: US$2,810bn AIM: US$93bn
Turnover value (Jan-Dec 2008) Main Market: US$4,587bn AIM: US$73bn
Source: London Stock Exchange 3 CONFIDENTIAL London Stock Exchange – key statistics
• 1,134 Domestic companies – Aggregate market cap $2.7 trillion • 330 International companies – Aggregate market cap $2.8 trillion • Money raised Jan-Sept 2009 $95 billion
• 1,094 Domestic companies – Aggregate market cap $58 billion • 259 International companies – Aggregate market cap $35 billion • Money raised Jan-Sept 2009 $5 billion
Source: London Stock Exchange 4 CONFIDENTIAL 450
400
The350 platform of choice for international companies
300 London Stock Exchange Nasdaq 250 NYSE
200
150
100
50
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 to Sept.
In 2006: • London Stock Exchange - 367 new companies joined. • NYSE, Nasdaq and Hong Kong Stock Exchange had 332 IPOs in 2006. • $104bn raised on the London Stock Exchange, $40bn on NYSE, and $29bn on Nasdaq.
In 2007: • London Stock Exchange - 252 new companies joined. • 142 new companies on Nasdaq, 67 on NYSE • $56 billion raised on the London Stock Exchange.
Source: London Stock Exchange 5 CONFIDENTIAL Approach to regulation
Companies Investors
Minimise Balance bureaucracy Competing Maximise protection and cost Needs
Ranked first in corporate Principles based - governance standards by GMI, UK “comply or explain” Deminor and Davis Global Advisors
Increased cost of compliance and US Rules based - risk premium (Financial Executive prescriptive and expensive & Korn Ferry Surveys)
Source: London Stock Exchange 6 CONFIDENTIAL The world’s most successful growth market
7 CONFIDENTIAL AIM companies: 1,353
Overseas AIM companies: 259 (non UK incorporated)
IPOs on AIM in 2008: 38
Total capital raised in 2008: US$6.4bn Key US$1.6 New Statistics US$4.8bn Further
Capital raised (new & further) since 1995: US$104bn
Source: London Stock Exchange 8 CONFIDENTIAL The widest choice of proven global markets
A choice of globally respected markets supported by a wide range of institutional & retail investors
Main Market
Supports earlier stage Supports more established companies in their initial companies seeking further growth period. growth. 1,353 issuers 1,464 issuers
Nominated Adviser (Nomad) UK Listing Authority
Sponsor
Source: London Stock Exchange 9 CONFIDENTIAL AIM admissions
UK and International admissions
600 UK International 120 500 124
400 61
300 12 87
200 15 399 13 16 14 338 3 294 265 27 7 6 100 197 7 1 162 147 146 120 131 100 96 87 68 17 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 to Sept
Source: London Stock Exchange 10 CONFIDENTIAL Raising new and further capital on AIM
Funds raised in ($bn)
New Further
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 to Sept
Source: London Stock Exchange 11 CONFIDENTIAL Distribution of AIM companies by market value Sept 09
350
300
250 Sep-09 200
150
100 No ofCompanies
50
0 Less than $5m - $10m - $20m - $50m - $100m - $200m - $500m - $1000m - over $5m $10m $20m $50m $100m $200m $500m $1000m $2000m $2000m
Market Value ($) Source: London Stock Exchange 12 CONFIDENTIAL Top AIM sectors by market value & no. of companies Sept 09
16,000 180 Latest Market Value $ 160 14,000 Number of Companies 12,000 140 120 10,000 100 8,000 80 6,000 60 Mkt Value ($m) Value Mkt 4,000 40 Number of companies 2,000 20 - 0 Media Mining Food Leisure Travel & General Support Financial Services Equity Oil & Gas Oil & Services Producers Computer Producers Services Software & Investment Real Estate Real Instruments Investment &
Source: London Stock Exchange 13 CONFIDENTIAL Institutional and Retail Investors
100
90 44 50 54 80 60 65 62
70 Retail
60 Institutional 50
40
30 56 50 46 40 20 35 38
10
0 2003 2004 2005 2006 2007 2008
Source: London Stock Exchange 14 CONFIDENTIAL Institutional Investors on AIM – Most active
Rank Most Active Institutions by Value of Value of Investments No. of Investments investment (US$m) 1 BlackRock Merrill Lynch Investment 2391.0 162 2 Invesco 1590.5 80 3 Artemis Investment Management 1154.6 138 4 Citivic (Nominees) 1134.4 4 5 Fidelity International 968.3 131 6 CDS & CO (Nominees) 786.5 7 7 Lansdowne Partners 751.8 32 8 Prudential Group 728.7 46 9 QVT Financial 718.2 32 10 AVIVA 699.1 70
Source: London Stock Exchange 15 CONFIDENTIAL Institutional Investors on AIM – Sector breakdown
Rank Most Active Sector by Value of Institutional Value of Investments (US$m) Investment 1 Oil & Gas Producers 9504.9 2 Mining 9482.3 3 Real Estate 7534.0 4 General Financial 6313.7 5 Equity Investments Instrument 5308.4
Rank Most Active Sector by Number of Institutional Number of Investments Investment 1 Mining 869 2 General Financial 811 3 Real Estate 571 4 Support Services 528 5 Oil & Gas Producers 515
Source: London Stock Exchange 16 CONFIDENTIAL AIM Rules
AIM Rules for Companies are intended to be straightforward and principles-based. The LSE monitors the regulatory framework that applies to AIM companies and, in response to on-going changes in global market places, it continues to make targeted amendments to protect AIM’s position as the world’s leading growth market.
- Major rule changes in 2007 - The AIM Rules for Nominated Advisers
17 CONFIDENTIAL AIM/Plus/Official List
CONDITION FOR ADMISSION AIM Official List PLUS (Main Market)
Minimum shares in public hands None 25% None
Minimum required years’ of audited historical financial None 3 years None information
75% of the entity’s business must be supported by a revenue No Yes No earning track record for the 3 year period
Control over the majority of the entity’s assets for the 3 year No Yes No period required
Clean working capital statement (sufficient working capital for Yes Yes Yes at least 12 months from the date of the prospectus)
Minimum market capitalisation No £700,000 No
Appointment of Sponsor / Nomad / Broker / Corporate adviser Nomad / Broker Sponsor Corporate adviser required
Re-vetting or Admission documents by Nomad by UKLA by Corporate Advisor
18 CONFIDENTIAL Appropriate regulation and oversight
AIM companies are subject to the AIM Rules which outline the continuing obligations of being on a public market. Key continuing obligations include:
• AIM companies must have a Nomad at all times
• AIM companies must disclose all price sensitive information in a timely manner: substantial transactions, related party transaction, reverse takeovers and other miscellaneous transactions
• Deadlines for half yearly and annual report and accounts
• Restrictions on deals for directors and applicable employees on AIM securities during close periods
• All directors accept full responsibility, collectively and individually for compliance with AIM Rules
• UK Corporate Governance standards
19 CONFIDENTIAL Role of the Nomad
What is a Nomad? Why is the system different?: − AIM has no formal ‘Regulator’ but Nomads are firms regulated by the FSA and London Stock Exchange − AIM is much more Nomad-led than other markets, which rely on lawyers and a regulator − Principles based approach around narrow rule book − Regular compliance visits by LSE AIM Regulation to Nomads to maintain standards
20 CONFIDENTIAL Role of the Nomad (cont’d)
The Nomad must confirm SUITABILITY of the Company to be admitted. Comfort obtained through: − Initial Assessment • Good business plan • Quality of management • Readiness to be public • Valuation • Likelihood of complying with rules • Free Float − Legal and accounting (plus technical, if applicable) due diligence − Verification of Admission Document/Prospectus − Background checks on Directors and shareholders − Research into the Company’s markets and prospects − Test marketing with institutions − Confirming directors have received advice and guidance as to the nature of their responsibilities and obligations − The Nomad is a friend and a policeman — a unique and pivotal role!
21 CONFIDENTIAL Fast Track Admission
Fast-track admission process for companies who have traded on AIM designated Market for at least 18 months.
22 CONFIDENTIAL Why choose AIM?
• The world’s most successful growth market
• A balanced approach to regulation
• An internationally focussed, professional investor base
• International profile
23 CONFIDENTIAL THE END
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