LSE urged to make Aim more attractive

The London Stock Exchange needs to address a lack of institutional interest in AIM companies urgently if the junior stock market is to fulfil its target of becoming a major international market for growth companies, according to a new survey.

The London Stock Exchange needs to address a lack of institutional interest in AIM companies urgently if the junior stock market is to fulfil its target of becoming a major international market for growth companies, according to a new survey.

The exchange said yesterday it was undertaking a review of AIM and how it should be positioned for the next five years but it insisted institutions were as keen as ever to invest in companies quoted on the market.

It was responding to the findings of a survey published by PKF, the accountancy firm, undertaken among 182 chairmen and chief executives of AIM-quoted companies.

PKF said AIM companies wanted a reassessment of the risk profile of AIM shares compared with other forms of stock market investments. The study said there was a strong case for the exchange to commission research into this area.

"If it transpires that the risk factors of AIM companies do not significantly differ from smaller company shares on the Official List, there would be significantly more pressure to revise the investment apportionment rules of institutional investors - this could help transform AIM into a major market worldwide," the study said.

The AIM market is in its 10th year and there are an increasing number of large, mature businesses quoted on the market. One of the original ideas behind AIM was to groom fledgling companies for the main market but the number of companies intending to transfer has fallen to 10 per cent, according to PKF. That compares with 30 per cent in 2002.

PKF claims that AIM has lost its traditional focus on young companies seeking funding for new product development before graduating to a quote on the main stock market.