You can't create amarket by decree
Wednesday 14 June 1995
Small and medium sized companies are always looking for cheaper and simpler ways of raising money; the corporate finance community welcomes any arena to push its expertise and fees. The problems confronting the Stock Exchange were always how to translate this interest into a viable market place. The ill-fated USM failed to rise to this challenge. AIM is being introduced as a new, improved formula.
The reaction from the market place has for the most part been one of wait-and-see scepticism, however. There will always be star small cap firms, attractive to investors. The purpose of any market like AIM is to spread this attraction down the field to the also-rans. The reality that did for the USM, however, was that you cannot create a market by decree - either the liquidity is there or it is not. AIM will stand or fall by this same rule.
There are also doubts about its claim to offer cheaper access to capital. Any company coming to the market needs a sponsor, and few of these would be willing to lend their reputations without having carried out pretty thorough due diligence. That might push up the costs of raising money on AIM to the levels seen in venture capital circles.
The need to impose adequate investor protection rules has probably strangled at birth AIM's chances of transforming capital-raising possibilities for small companies. That, however, is one of the key challenges facing corporate Britain, as the Treasury recognises. We are good at starting small businesses, and have an impressive clutch of world-class companies. But in the middle ground, Britain is poorly represented. Poor management of the economy over a prolonged period is only part of the explanation; the other is inadequate long-term finance at an affordable price. The catalyst for change here may well have to come from a very different source, in the shape of a concerted shift towards long-term fixed-rate financing by banks. A stable low-inflation environment is also imperative. At this stage, however, AIM does not look as if it will star in the history books.
- 1 Students heading off to 'charity challenge' grounded at Gatwick after travel firm goes bust
- 3 Daily Show's Jon Stewart destroys Fox News for its Ferguson coverage
- 4 When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
- 5 Like Jennifer Aniston, I am no less of a woman because I am childless
Ashya King missing: Police hunt five-year-old boy with brain tumour snatched from Southampton hospital by his parents
YouTube video posted by Isis militants shows 'execution of 250 Syrian soldiers'
Daily Show's Jon Stewart destroys Fox News for its Ferguson coverage
Californian drought is so severe it's 'causing the ground to move'
Botched ice bucket challenge leaves man critically injured after plane drops hundreds of gallons of water
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
Ukip Douglas Carswell defection: Tory MP jumps ship to join Nigel Farage
- < Previous
- Next >
iJobs Money & Business
£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...
£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...
£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...
£400 - £500 per day: Orgtel: Test Manager - Banking - West Yorkshire - £400-£5...