Alternative market has slow but steady start

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Financial Editor

The Alternative Investment Market got off to a quiet start yesterday, with five of the 10 pioneering listings ending trading with their share price lower.

"It was a good, solid, satisfactory start - no high jinks and no drama," said Robin Boyle of stockbroker Dunbar, Boyle and Kingsley. "It was by no means furious trading, but we got some business done and that was the main thing."

AIM is the London Stock Exchange's latest vehicle for providing more efficient capital raising for smaller companies, replacing the USM. But the launch has been overshadowed by widespread scepticism among market professionals and institutional investors about sufficient liquidity and AIM's capacity to deliver lower capital raising costs.

"It will take a little time for the institutional investors to be persuaded to come in; they are naturally a bit cautious about liquidity in these stocks and the prospects for AIM," said Julian Palfreyman, director of market making at Winterflood Securities.

The ten companies, mostly from the 4.2 matched-bargain facility for infrequently traded shares, attended a launch cocktail party at the Stock Exchange yesterday morning with their sponsoring brokers. "They all seemed pretty happy with this sort of start, nothing too explosive, just enough to keep us interested and occupied," said Mr Palfreyman.

"Today is purely the start for AIM," said Theresa Wallis, its chief operating officer. "We expect to see several companies coming to the market during the next few months.

"We see the market providing an attractive financing option for companies with growth potential and enabling them to have their shares more widely traded."