AIM Increasingly Popular For Offshore Listings

by Phillip Morton, Investors Offshore.com

07 February 2007

Offshore listings on the London Stock Exchange's Alternative Investment Market (AIM), an international market for smaller growing companies, are on the rise according to offshore law firm, Walkers.

Walkers reports that it is seeing more interest from companies in India, China, and other emerging markets who want to gain the benefits of offshore listings by accessing the exchange through Jersey and the British Virgin Islands.

“AIM offers a tremendous amount of liquidity to smaller companies, as well as access to institutional investors who often turn into mentors and partners,” observed Hiren Patel, a partner in Walkers’ Jersey office who did the first offshore AIM listing for a Chinese company in 2004.

“It’s a win-win situation since AIM has lower listing fees compared to other exchanges and investors often see significant return on their investments in emerging markets which AIM can access. There are clear tax advantages, on top of the benefits of AIM listing, if the listing is done through an offshore jurisdiction such as Jersey or the BVI," Patel added.

According to Walkers, offshore listings for Indian companies are expected to increase exponentially in 2007. In 2006, 11 Indian companies listed through London on the exchange, raising more than GBP1 billion (US$1.97 billion). Seven of these listings were from offshore jurisdictions, up from only one in 2005.

Walkers notes that India is increasingly viewed as an emerging market and changes in the country’s regulatory regime allow both inward and outward investments. The Reserve Bank of India recently relaxed rules around the conversion of the rupee, which also simplifies investments and opens up more opportunities in Europe for Indian companies. Asian companies have also seen the benefits of listing on AIM, with 43 companies listed on the exchange, 25 added in 2006 alone.

“We’ve done ten offshore listings for Chinese companies in the last 18 months,” Patel continued. “The flexibility and clear path to an IPO are attractive to virtually any company. However, for countries such as China where foreign investment may be more challenging, an offshore listing on AIM opens up many more opportunities.”

Walkers predicts that the new authorisation process enacted earlier this month by the Jersey Financial Services Commission for closed-ended funds that are or will be listed on designated stock exchanges will further boost AIM listings in this jurisdiction. The changes will streamline the authorisation process, which will benefit investors and entrepreneurs.

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