London's AIM - U.S. Company IPO and Secondary Offering Activity - 2010

The most significant event on the London Stock Exchange's AIM during 2010 was Seattle-based HaloSource's London AIM IPO which raised $80 million; $50 million for the Company and $30 million for Selling Shareholders.  This post contains HaloSource's key London Stock Exchange AIM IPO listing and financial metrics, along with some U.S.-specific legal and accounting considerations.

Overall activity on London's AIM accelerated during 2010 with 46 AIM IPOs compared to only 13 AIM IPOs during 2009.  Gross capital raised from London AIM IPOs amounted to £1.0 billion ($1.6 billion) with 22 of the 46 London Stock Exchange AIM IPOs coming to market during Q4.

Secondary Offerings on London's AIM remained strong during 2010, raising £5.7 billion ($9.1 billion).

London's AIM IPO Highlights

• IPO activity on the London Stock Exchange's AIM accelerates, 46 AIM listings during 2010 compared to only 13 AIM IPOs listings 2009
• 8 London AIM listings in each of Q1, Q2 and Q3
• 22 London AIM listings in Q4

• £1.0 billion ($1.6 billion) raised for London Stock Exchange AIM IPOs in 2010

• First U.S. company London Stock Exchange AIM listing since July 2008 raises $80 million in October 2010
• $50 million raised for the Company, $30 million raised for Selling Shareholders in the London AIM IPO
• Opening market capitalization on London's AIM of $160 million
• Trailing revenue of $11.8 million, 13.6x, 40% - 50% growth expected, 9.4x
• Loss from continuing operations of $9.6 million
• Future plans include a move from London's AIM to the Main Market of the London Stock Exchange and/or NASDAQ
• Additional details can be found at HaloSource AIM IPO

• ‘Operating companies’ return to the London Stock Exchange's AIM, account for 78% of London AIM IPOs, mirror image of 2009
• However, the London AIM IPO market remains selective and below trend (50 - 150) for foreseeable future
• Given market conditions, prospective issuers should carefully consider:
• Suitability before embarking on the AIM listing process
• Key advisers, most notably London AIM Nominated Advisers (Nomads) and London AIM Nominated Brokers

• Average ‘operating company’ IPO on London's AIM raised £20 million ($32 million)
• 67% of London AIM IPOs raised between £5 million and £75 million ($8 million and $120 million)

• Average opening market capitalization of £69 million ($110 million) on London's AIM
• 74% of opening market caps on London's AIM between £10 and £300 million ($16 and $480 million)

• IPO dilution of existing shareholders of ‘operating companies’ amounted to 29%
• Average and median share price return of 44% and 21% since London AIM IPO (median date 9/24/10)
• Average post-IPO free float on London's AIM of 48%

• 13 of the 46 companies that listed on the London Stock Exchange's AIM had revenues > £1 million (range £1 million - £156 million)
• Concentrated in technology (4 of 4), industrials (3 of 7) and consumer services (2 of 4)
• Those w/o meaningful revenues broadly in the natural resources space or financials

• 4 of the 46 companies that listed on the London Stock Exchange's AIM had profits > £1 million (range £2 million - £10 million)
• Average trailing PE and EBITDA multiples of 13.47 and 8.49, respectively

• Industry dispersion and insight into the 46 companies listed on London's AIM - see below for details
• Geographic dispersion and related commentary for the 46 compaies listed on London's AIM - also see below for details

London's AIM Secondary Offering Highlights

• Secondary offerings on the London Stock Exchange's AIM remains strong

• £5.7 billion ($9.1 billion) raised in secondary offerings on the London Stock Exchange's AIM during 2010

• ‘Operating companies’ listed on London's AIM capture 85% of secondary offering funds raised on London's AIM during 2010

• Average size of ‘operating company’ secondary offerings on London's AIM spiked by 80% during 2010

                2008 - £5.15m ($8.24m)     2009 - £4.56m ($7.30m)     2010 - £8.22m ($13.15m)

• Relative number of London Stock Exchange AIM-listed companies completing secondary offerings on London's AIM stabilizes

2008 - 36%                              2009 - 54%                              2010 - 56%

U.S. Company London AIM IPO and London AIM Secondary Offering Highlights

• U.S. companies account for 6% of all London Stock Exchange AIM listings since 2008
• U.S. companies account for 9% of all London Stock Exchange AIM ‘operating company’ listings since 2008
• Respectively account for 7% and 14% of gross funds raised from London AIM IPOs since 2008

• £460m raised from secondary offerings on London's AIM for 31 U.S. companies since 2009
• 55% of all U.S. companies listed on London's AIM have completed at least one secondary offering on London's AIM since 2009

• Selling shareholders participate in 50% of U.S. company London Stock Exchange AIM listings since 2008
• Accredited Investors and QIBs participate in 26% of U.S. company secondary offerings on London's AIM

London AIM IPOs

All Companies	Number of London AIM IPOs	Gross Funds Raised (in £ millions)	Average Funds Raised (in £ millions)
2008	38	918	24
2009	13	610*	47*
2010	46	1,017	22
Total	97	2,545	26

*  Includes two large London AIM IPOs focused on acquiring distressed real estate and distressed commercial businesses.  If excluded, average drops to £23m.

‘Operating Companies’*	Number of London AIM IPOs	Gross Funds Raised (in £ millions)	Average Funds Raised (in £ millions)
2008	27	523	19
2009	3	16	5
2010	36	723	20
Total	66	1,262	19

*  Generally excludes SPACs, Investing Companies and Investment and Real Estate Funds.

The key takeaway from comparing the tables above is the return of ‘operating companies’ to the London  Stock Exchange's AIM which accounted for 78% of the companies listed on London's AIM and 71% of the gross funds raised on London's AIM during 2010.  The £20 million ($32 million) average raised by the ‘operating companies’ listing on the London Stock Exchange's AIM is very consistent with 2008 when the average was £19 million ($30 million) and even 2007 when the average was £18 million ($29 million).  2009 is viewed as an anomaly given the lack of activity.

While the return of ‘operating companies’ listing on the London Stock Exchange's AIM is a positive sign, the London AIM IPO market remains below trend (50 - 150) and is expected to remain so for the foreseeable future.  In addition to the current macroeconomic situation, Secondary Offerings on London's AIM have been booming (£5.7 billion or $9.1 billion raised on London's AIM during 2010) as a result of attractive valuations for companies listed on AIM that are ‘known quantities’.  The strength of Secondary Offerings on London's AIM is a positive sign for London AIM IPOs over the medium to long term as London AIM investors remain confident in London's AIM; however, the shifting of their risk profiles towards London Stock Exchange AIM IPOs is sure to be gradual.

The types of ‘operating companies’ that listed on the London Stock Exchange's AIM during 2010 generally fell into two very distinct categories; those with revenue traction and profits, or very close to profitability, and natural resource plays (mining and oil and gas) at a very nascent stage.  The latter all had owned or identifiable assets, solid geological studies and exceptional management teams with demonstrable track records of success.

The chart below provides the distribution of gross funds raised from London Stock Exchange AIM IPOs during 2010.  The sweet spot for London AIM IPOs is between £5 million ($8 million) and £75 million ($120 million).

 

Of the aggregate gross funds raised from London Stock Exchange AIM IPOs, 92% was for the companies and 8% was for selling shareholders which were present in seven of the London AIM IPOs, although, only five sold a meaningful stake.  While the average amount of gross capital raised from London AIM IPOs was £22 million ($35 million), the median was £11 million ($18 million).

The equation in the chart below can be used to predict the cost of a London Stock Exchange AIM IPO with 95% confidence.  The 26 data points represent the gross funds raised and associated costs for the ‘operating company’ London AIM IPOs that raised between £3 million ($5 million) and £75 million ($120 million).  Since the average ‘operating company’ listing on London's AIM raised £20 million ($32 million), the expected cost would be £1.70 million ($2.72 million) or 8.50% of the gross funds raised from the London AIM IPO.

 

For the entire market, the average and median offering costs of a London Stock Exchange AIM IPO amounted to 14% and 9%, respectively, of the gross funds raised in the London AIM IPO, however, the average is skewed by two ‘failed’ London AIM IPOs where the offering costs consumed 59% and 100% of the gross funds raised.  When these two are ‘normalized’ with their London AIM IPO offering costs set at 10% of the gross funds raised, the average London Stock Exchange AIM IPO offering costs amounted to 10% of the gross funds raised and the median remained the same at 9%.  When the same analysis is applied to all of the ‘operating companies’ listed on the London Stock Exchange's AIM, the result is similar where the average and median offering costs drop from 15% and 11%, respectively, to 11% and 10%, respectively, of the gross funds raised in the London AIM IPO.

The next chart provides the distribution of opening market capitalizations on the London Stock Exchange's AIM.  The average company’s opening market capitalization on London's AIM was £69 million ($110 million) whereas the median was £36 million ($58 million).  74% of the companies listing on London's AIM commanded opening market capitalizations that ranged from £10 million to £300 million ($16 million to $480 million).

 

The aggregate opening market capitalization of the 46 companies that listed on London's AIM during 2010 was £3.2 billion ($5.1 billion).  The average and median post-IPO free float of these companies listed on London's AIM was 48% and 49%, respectively.

The next chart highlights an interesting shift in the market that occurred during 2008, a substantial decrease in London Stock Exchange AIM IPO dilution of existing shareholders.  2009 is viewed as an anomaly given the lack of activity.

There are two main reasons for this shift.  First, the London Stock Exchange (LSE) codified the AIM Rules for Nominated Advisers (Nomads) in early 2007 which increased the scrutiny of prospective new entrants by Nominated Advisers (Nomads) since the Nominated Adviser (Nomad) vouches to the London Stock Exchange as to a company’s suitability for listing on London's AIM.  Second, London AIM investors have become more risk adverse.  Consequently, the quality of the companies listing on London's AIM has increased and, as a result, the London Stock Exchange AIM IPO dilution of existing shareholders has decreased.

 

For the entire market, the average and median dilution of existing shareholders in connection with a listing on London's AIM was 38% and 28%, respectively.  With respect to the ‘operating companies’ listed on London's AIM, it was 29% and 25%, respectively.  The expectation for the foreseeable future is for London AIM IPO dilution of existing shareholder to remain in the 25% to 30% range.

The final chart in this section provides the distribution of share price returns since each of the 46 companies listed on the London Stock Exchange's AIM.  It’s important to note that the median London AIM IPO date is September 24, 2010, therefore, the average and median returns for the companies listed on London's AIM of 44% and 21%, respectively, only represent, on average, the last 98 days of 2010.  As a point-of-reference, the FTSE AIM All-Share Index rose 43% during all of 2010 and only 20% from September 24, 2010 through the end of the year, therefore, the aftermarket performance of the 46 companies that listed on the London Stock Exchange's AIM has been quite strong.

 

London AIM IPO Industry Dispersion

Companies listed on the London Stock Exchange's AIM are organized into 90 sub sectors which feed into 40 sectors which feed into 10 super sectors.  The only super sectors that were not represented with London AIM IPOs during 2010 were Telecommunications and Utilities.  The chart below provides a breakdown of the eight super sectors in which one or more London Stock Exchange AIM IPO occurred during 2010.  Since the classifications can be deceptive, the table below the chart provides some insight into the individual companies.

 

     

Basic Materials (13)	Mining; gold (5), iron ore (3), copper (2), diamonds (1) and coal (1) and one cleantech company
Financials (8)	One that intends to invest in a U.K. public company for a turnaround, one that would like to acquire and invest in natural resource related assets, one involved in real estate investment and development, one that intends to acquire or invest in hydropower projects, one that is a country-specific investment company, one that is a new bank to be built primarily through acquisition, one that is a full service broker-dealer and one that intends to acquire or invest in the TMT sector
Industrials (7)	One intends to acquire businesses that are focused on homeland security and defense, one designs and manufactures tracking devices and provides related monitoring services, one provides business process outsourcing services for the financial services, entertainment and telecommunications industries, one intends to develop and operate port and logistics facilities, one intends to acquire and develop a portfolio of wind farms, one is an operator of privately owned jet aircraft and one designs and manufacturers LED light engines and laser diodes modules
Oil & Gas / Alternative Energy (6)	Exploration and Production (4), one is a materials discovery company and one is a renewable energy and cleantech investment company
Technology (4)	One is a data center, one is a healthcare software and related services provider, one is a provider of software applications for drug and chemical development and one develops set-top boxes for the delivery of Internet-based TV
Consumer Services (4)	One is an online dating service, one is a franchisee of an international pizza delivery company, one is a film production company and one is a provider of mobile marketing solutions
Consumer Goods (3)	One produces palm oil, one supplies potatoes and one has healthcare related technology that enhances the taste and mouth feel of medicines
Healthcare (1)	This company has IP surrounding a variety of medical applications

Revenue and income/loss figures for most of the companies listed on the London Stock Exchange's AIM are not particularly meaningful given their early stage profiles.  Of the 46 companies listed on London's AIM, 13 generated revenues > £1 million during their most recent financial year with the range being £1 million - £156 million ($2 million - $250 million).  Of those 13 companies listed on London's AIM, six were profitable; two with small profits and four with ‘normal profits’.  The average of the four companies listed on London's AIM with ‘normal profits’ was a trailing PE and EBITDA multiple of 13.47 and 8.49, respectively.

The most interesting aspect of the financial details of these companies listed on the London Stock Exchange's AIM is that fact that those with meaningful levels of revenues and profits are concentrated in just three of the eight super sectors.  All four of the technology companies listed on London's AIM generated meaningful revenues and two of the four generated meaningful profits.  Three of the seven industrial companies listed on London's AIM met the revenue test and one met the profits test.  Two of the four consumer services companies listed on the London Stock Exchange's AIM met the revenue test but none met the profits test.

Four of the 46 companies that completed IPOs on the London Stock Exchange's AIM during 2010 are dual listed on the Australian Stock Exchange with two utilizing the Designated Markets Route (i.e. the fast track route) to London's AIM.  An entirely different four companies were previously admitted to and trading on the PLUS Stock Exchange (the old OFEX) in the U.K.  The two U.S. companies that listed on London's AIM during 2010 remained domiciled in the U.S. and continue to prepare their financial statements in accordance with U.S. GAAP.  One of the two U.S. companies that listed on the London Stock Exchange's AIM trades over-the-counter in the U.S. on the Pink Sheets.

London AIM IPO Geographic Dispersion (Main Place of Operation)

Unsurprisingly, the U.K. is the main place of operation for more London Stock Exchange AIM-listed companies than any other country, region or continent.  The U.K. is well represented in each of the eight super sectors on London's AIM with between one and three companies.  It is also unsurprising that Basic Materials (i.e. mining) is the focus of many of the African companies listed on London's AIM.  The only other significant concentrations of companies listed on the London Stock Exchange's AIM are Industrials in India and Consumer Services in Continental Europe.

 

     

London AIM Secondary Offerings

The success of the secondary offering market on London's AIM is indisputable, which is the defining characteristic of a mature market.  Since 2008, secondary offering funds raised on London's AIM have outpaced IPO funds raised on London's AIM by more than 5:1.  The expectation is that this ratio will cut in half over the next few years, in line with the macroeconomic healing process, as London AIM investors’ risk profiles gradually shift back towards London Stock Exchange AIM IPOs.  The early-stage growth profile and/or attractive valuations for companies listed on London's AIM that are ‘known quantities’ have been the main drivers of secondary offering activity on London's AIM.

When reviewing the “All Companies” tables below, one anomaly should be adjusted for in order to arrive at a fair comparison.  During 2009, there were three large London AIM Placing & Open Offers which raised an aggregate of £1.1 billion for real estate investment, development and management companies.  Historically, the vast majority of secondary offerings on the London Stock Exchange's AIM take the form of Placings and are much smaller in size.  When the adjustments are made, the aggregate secondary offering funds raised on London's AIM during 2009 drops from £4.9 billion to £3.8 billion and the average drops from £6.38 million to £5.03 million.

The key takeaways from the tables below are that secondary offering activity on the London Stock Exchange's AIM has remained strong and 83% of the funds raised in secondary offerings on London's AIM over the last three years have been for ‘operating companies’ listed on London's AIM, after adjusting for the previously mentioned anomaly during 2009.

All Companies	London AIM IPO Funds Raised (in £ millions)	London AIM Secondary Offering Funds Raised (in £ millions)
2008	918	3,214
2009	610*	4,861**
2010	1,017	5,738
Total	2,545	13,813

*   Includes two large London AIM IPOs focused on acquiring distressed real estate and commercial businesses.  If excluded, London AIM IPO funds raised drops to £248m.

** Includes three large London AIM Placing & Open Offers for real estate companies.  If excluded, London AIM Secondary Offering funds raised drops to £3,814m.

‘Operating Companies’*	London AIM IPO Funds Raised (in £ millions)	London AIM Secondary Offering Funds Raised (in £ millions)
2008	523	2,539
2009	16	3,113
2010	723	4,888
Total	1,262	10,540

*  Generally excludes SPACs, Investing Companies and Investment and Real Estate Funds.

The key takeaway from the tables below is that the average size of secondary offerings on London's AIM spiked from 2009 to 2010; 65% for London AIM as a whole, after adjusting for the previously mentioned anomaly during 2009, and 80% for the ‘operating companies’ listed on the London Stock Exchange's AIM, from £4.56 million ($7.30 million) to £8.22 million ($13.15 million).

  

All Companies	Number of London AIM Secondaries*	Gross Funds Raised (in £ millions)	Average Funds Raised (in £ millions)
2008	578	3,214	5.56
2009	762	4,861**	6.38**
2010	691	5,738	8.30
Total	2,031	13,813	6.80

*   This is the number of discrete secondary offerings on London's AIM.  Some companies completed more than one secondary offering on London's AIM per year.

** Includes three large London AIM Placing & Open Offers for real estate companies.  If excluded, the gross and average drop to £3,814m and £5.03m.

‘Operating Companies’*	Number of London AIM Secondaries**	Gross Funds Raised (in £ millions)	Average Funds Raised (in £ millions)
2008	493	2,539	5.15
2009	682	3,113	4.56
2010	595	4,888	8.22
Total	1,770	10,540	5.95

*   Generally excludes SPACs, Investing Companies and Investment and Real Estate Funds.

** This is the number of discrete secondary offerings on London's AIM.  Some companies completed more than one secondary offering on London's AIM per year.

Consistent with the above, the chart below illustrates a slight, but noticeable, secondary offering trend developing on the London Stock Exchange's AIM with the breakpoint being £5 million ($8 million).  The relative number of secondary offerings on London's AIM raising less than this amount has decreased during 2008, 2009 and 2010 from 80%, 79% and 75%, respectively, whereas the relative number of secondary offerings on London's AIM raising between £5 million ($8 million) and £30 million ($48 million) has increased during 2008, 2009 and 2010 from 15%, 17% and 19%, respectively.

This trend has developed because, during 2008 and 2009, London Stock Exchange AIM investors were willing to deploy relatively small amounts of capital to continue to assess the viability of certain London AIM-listed companies, whereas in 2010 capital was being deployed for London AIM-listed companies executing on organic and/or acquisitive growth opportunities.

 

The relative number of London Stock Exchange AIM-listed companies that were able to complete secondary offerings on London's AIM during 2010 stabilized at 56%.  The chart below illustrates the ‘crash’ of 2008 and a wave of relatively small ‘rescue financings’ on London's AIM during 2009.  The best evidence of the health and stability of secondary offerings on London's AIM is the fact that the average secondary offering on London's AIM raised £8.30 million ($13.28 million) during 2010 with the average secondary offering on the London Stock Exchange's AIM during 2005 - 2007 raising a very similar amount, £7.85 million ($12.56 million).  As previously mentioned, the breadth and depth of secondary offering activity on London's AIM is the defining characteristic of a mature market.

 

U.S. Company London AIM IPOs

In order to understand where the London Stock Exchange AIM IPO market is today for U.S. companies, it’s important to place the last three years, 2008 – 2010, in some historical context.  From 2005 – 2007, there were 589 ‘operating company’ listings on London's AIM, 50 of which were of U.S. ‘operating companies’ listing on London's AIM, 8.5% of the total.  From 2008 – 2010, there were 66 ‘operating company’ listings on the London Stock Exchange's AIM, six of which were of U.S. ‘operating companies’ listing on London's AIM, 9.1% of the total.

The average U.S. ‘operating company’ listing on AIM has consistently raised £10 million ($16 million) more than the average ‘operating company’ listing on AIM.  From 2005 – 2007, the average U.S. ‘operating company’ listing on AIM raised £24 million ($38 million) whereas the average for London Stock Exchange AIM as a whole was £14 million ($22 million).  From 2008 – 2010, the average U.S. ‘operating company’ listing on AIM raised £29 million ($46 million) whereas the average for London AIM as a whole was £19 million ($30 million).

U.S. companies have accounted for 14% of all ‘operating company’ listings on London's AIM and capital raised on London's AIM over the last six years.

U.S. Companies	Number of London AIM IPOs	Gross Funds Raised (in £ millions)	Average Funds Raised (in £ millions)
2008	4	123	31
2009	-	-	N/A
2010	2	52	26
Total	6	175	29

U.S. Company London AIM Secondary Offerings

The 56 U.S. companies currently listed on London's AIM account for 4.7% of the 1,194 companies listed on London's AIM and their share of secondary offering funds raised has been quite consistent with that weighting and from year-to-year.

When reviewing the table below for the secondary offering activity on London's AIM as a whole, one anomaly should be adjusted for in order to arrive at a fair comparison.  During 2009, there were three large London AIM Placing & Open Offers which raised an aggregate of £1.1 billion for real estate investment, development and management companies.  Historically, the vast majority of secondary offerings on the London Stock Exchange's AIM take the form of Placings and are much smaller in size.  When the adjustments are made, the aggregate secondary offering funds raised on London's AIM during 2009 drops from £4.9 billion to £3.8 billion and the average drops from £6.38 million to £5.03 million.

Entire Market All Companies	Number of London AIM Secondaries*	Gross Funds Raised (in £ millions)	Average Funds Raised (in £ millions)
2009	762	4,861**	6.38**
2010	691	5,738	8.30
Total	1,453	10,599	7.29

*   This is the number of discrete secondary offerings on London's AIM.  Some companies completed more than one secondary offering on London's AIM in each year.

** Includes three large London AIM Placing & Open Offers for real estate companies.  If excluded, the gross and average drop to £3,814m and £5.03m.

When reviewing the table below for the secondary offering activity of the U.S. companies listed on the London Stock Exchange's AIM, one anomaly should be adjusted for in order to arrive at a fair comparison.  During 2010, one U.S. company listed on London's AIM attracted a strategic investment of £152 million ($243 million), ultimately leading to an outright acquisition.  If this large strategic investment is excluded, the average funds raised from secondary offerings on London's AIM drops from £14.53 million to £6.89 million, more in line with the average for 2009.

All U.S. Companies	Number of London AIM Secondaries*	Gross Funds Raised (in £ millions)	Average Funds Raised (in £ millions)
2009	23	184	8.00
2010	19	276**	14.53**
Total	42	460	10.95

*   This is the number of companies that completed secondary offerings on London's AIM as opposed to the number of discrete secondary offerings on London's AIM.

** Includes one large strategic investment of £152m.  If excluded, the gross and average drop to £124m and £6.89m.

Of the 42 U.S. companies listed on London's AIM that completed secondary offerings on London's AIM since 2009, 11 completed secondary offerings on London's AIM in both years, therefore, 55% of the U.S. companies listed on London's AIM (31 of 56) have completed at least one secondary offering on London's AIM since 2009.

The distribution of gross funds raised by these 42 U.S. companies listed on the London  Stock Exchange's AIM is illustrated in the chart below.  Since 2009, 88% (37 of 42) of the U.S. companies listed on London's AIM that have completed secondary offerings on London's AIM have raised between £1 and £30 million.

 

U.S. Company London AIM Industry Dispersion

Companies listed on the London Stock Exchange's (LSE) Alternative Investment Market (AIM) are organized into 90 sub-sectors which feed into 40 sectors which feed into 10 super sectors.  The 56 U.S. companies that are listed on London's AIM are quite diverse and operate in eight of the 10 super sectors, however, there is a concentration of oil and gas producers listed on London's AIM in Texas and concentrations in technology, including; digital media, biotech and cleantech, between Boston and Washington D.C. and in California.  Industrial companies listed on London's AIM contain a mixture of cleantech companies (fuel cells and solar) and B2B electronic payment companies.  Within Basic Materials, 50% of the U.S. companies listed on the London Stock Exchange's AIM produce chemicals/compounds for the health and growth of fish, plants and agriculture.  Within Consumer Services, 67% are media companies listed on London's AIM with some unique technology.  Within Consumer Goods, one company listed on London's AIM is developing fuel cells for vehicles and the other is a winery.

 

U.S. Company London AIM Selling Shareholder Activity

The ability of existing shareholders to sell some or all of their holdings in a London Stock Exchange AIM IPO depends on a variety of factors; the most important of which are the strength of the company and the level of investor support.  Historically, from 2005 – 2007, 22% of U.S. companies listing on London's AIM included selling shareholders who were often either founders of the company, longstanding members of executive management or the board of directors, commercial partners who had made a strategic investment in the company or VCs/PEGs who invested in and nurtured the company for several years prior to its London Stock Exchange AIM IPO.  Two of the four U.S. companies listing on London's AIM during 2008 included selling shareholders.  In one of these London AIM IPOs, the Chairman and President, who had been with the company since 1969, sold 30% of his stake for £26 million ($42 million).  One of the two U.S. companies listing on London's AIM during 2010 included selling shareholders.  In that London AIM IPO, the selling shareholders included a PEG, a VC, a Strategic Investor and several Angel Investors for an aggregate of £19 million ($30 million).

While selling shareholders are most common in conjunction with a London Stock Exchange AIM IPO, U.S. company insiders have sold in the aftermarket in organized transactions on London's AIM on three occasions since 2004; twice as part of secondary offerings on London's AIM and once on a standalone basis.  In all three instances, the companies listed on London's AIM were performing exceptionally well with the organized insider selling driven by a need to “satisfy excess demand” for the company’s London Stock Exchange AIM-listed shares.  There were no such transactions during 2009 or 2010.

U.S. Company London AIM Accredited Investor and Qualified Institutional Buyer (QIB) Activity

U.S. accredited investors and QIBs are permitted to participate in London AIM IPOs and secondary offerings on the London Stock Exchange's AIM.  Historically, from 2005 – 2008, they have provided 20% of the funding for U.S. companies listing on London's AIM via IPO and 20% of the secondary offering funds raised on London's AIM for those companies.

During 2009, 26% (6 of 23) of the U.S. companies that completed secondary offerings on the London Stock Exchange's AIM were at least partially financed by accredited investors or QIBs, providing 29% of the total funds raised on London's AIM.  During 2010, 26% (5 of 19) of the U.S. companies that completed secondary offerings on London's AIM were at least partially financed by accredited investors or QIBs, providing 58% of the total funds raised on London's AIM, however, this is skewed by the £152 million ($243 million) discussed above and would have otherwise only been 6%.