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September 11, 2007

AIM: Not So True

Alison, I know this world is killing you.
Oh, Alison, my aim is true.
My aim is true.
         - "Alison", by Elvis Costello, from My Aim is True (1977)

The story among VCs about the London-based AIM Exchange for a few years now has been lower costs, easier IPOs, and a quick liquidity event for U.S. companies kept out of regulation-bound U.S. public markets. Not true, as it turns out.

London's AIM Exchange isn't the panacea some VCs and others hoped for. Volume remains minimal for most IPO listings, costs are up, delistings there are running ahead of Nasdaq, and people are generally tired of selling stock to themselves:

Paul Turner decided to delist his recruitment company from London's Alternative Investment Market after realizing the only buyers in his third share sale were the three who already owned most of the stock.

"Every time we chose to raise money, it was the same major shareholders that wanted to participate,'' said Turner, 41, chief financial officer of BNB Recruitment Solutions Plc. The firm went private in February after trading on AIM for five years and reaching a peak value of $66 million.

"We recognized that we could be achieving the same in a delisted environment without all the costs,'' he said.

Whoa, people are finally realizing that selling stock in a no-volume market isn't a really effective financing strategy. Sure, it makes money for AIM and the underwriters, but that's not particularly appealing to most rational people.

[via Bloomberg]

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