US firms flock to London
Article Date: Apr 27 2006
London’s AIM market has found itself welcoming a flotilla of US firms in recent weeks, as increasing numbers of growing North American businesses cross the Atlantic in search of a stock market listing.
Over the past six weeks a total of seven companies have made the switch to these shore, almost half the number that completed the same voyage in 2005. Moreover, expectations are that this is just the beginning of what may prove to be a veritable armada.
The causes of this influx are two-fold. Firstly there are the quirks of the US market itself. As Donald Stewart of law firm Faegre & Benson explains, US corporate finance advisers keen to raise equity finance for small and medium sized companies are getting themselves acquainted with AIM because ‘NASDAQ has raised its bar. Imposing minimum market capitalisations and share prices has left large numbers of US growth companies with nowhere to go. The US National Venture Capital Association estimates there has been a 59 per cent decline in listings for small to medium sized companies in the US.’
Then there is the regulation. In the wake of the Enron scandal, US regulators introduced the controversial Sarbanes-Oxley standards, which were designed to tighten up the regulation and accounting standards applicable to quoted companies. While they appear to have achieved this some have suggested that they may have actually gone too far and, as a side effect, increasing numbers of growing US companies have started to look overseas for a stock market listing. AIM seems to be the natural choice.
Certainly to Jarvis Coffin, chief executive of Massachusetts-based internet advertising group Burst Media, the aforementioned factors were key in deciding to list in London. Burst floated on AIM in late April, completing a £38 million placing en-route and Coffin admits Sarbanes-Oxley was a major consideration. ‘We don’t have a problem with compliance,’ he explains, ‘but the costs associated with achieving Sarbanes-Oxley compliance are extremely high.’
