Company calls off AIM flotation

A company that had been seeking a stock market listing on the Alternative Investment Market has pulled its flotation, blaming a "soft market".

It is thought to be one of the first companies to back-out of an AIM flotation at such a late stage.

VLSI, an Uxbridge distributor of computer components, was due to come to the market at the end of June or the end of July.

The float would have valued the company at around pounds 12m. However, the company changed its mind in the last few days.

A spokesman for Teather & Greenwood, the broker that was overseeing the float said: "We felt the market was a bit iffy. Everyone has either gone away for their holidays or gone to the test match or Wimbledon. We felt it might be in the company's best interests to hang on until the autumn."

He stressed that the decision had nothing to do with the quality of the company. "It's a nice little business."

However, one fund manger, who declined to buy shares in the company said the reason was concerns over the large numbers of companies coming to the market and the high price of the offer.

"My suspicion was that they couldn't raise the money. I thought it was a wee bit expensive."

A spokesman for VLSI said that the company had not "pulled its float", but was looking at "alternative proposals".

VLSI's experience could be seen as a salutary experience for other companies seeking a listing on AIM. One fund manager said: "People are happy to support the market but shouldn't take the mickey. Things should not be overpriced."

As a market designed for smaller companies, many pundits have been waiting for the first casualty.

Some expect an AIM company to go under in the next few months but believe that the first casualty could be a blessing in disguise.

"The market will be able to cope with it. It will show that Aim has grown up," one said.