Growing a business:
Available markets
There are three available markets in the UK:
- OFEX
- AIM (Alternative Investment Market)
- Stock Exchange Main Market
The regulatory requirements, the costs of flotation and the ongoing costs are the lowest for OFEX, more for AIM and the highest for a main market listing.
OFEX is suitable for companies looking to raise up to £10m. However most investors are private individuals rather than the institutions. There is a wider pool of investors on AIM, for example venture capital trusts invest in AIM companies. To obtain the widest exposure to investors you would need to invest on the main market.
OFEX is not a regulated market and securities traded on it are unlisted and unquoted. Both the main market and AIM are regulated by the London Stock Exchange. The main differences in the admission criteria for AIM and the main market are
- on the main market, 25% of the shares must be held by the public, but there is no limit on AIM
- normally a three year trading record is required for a listing on the main market, and there is no trading requirement for AIM. However, if an AIM company has been in existence for two years or less, existing shareholders must agree to not sell their shares for at least 12 months after flotation
- if you have a main market listing you will need to get prior shareholder approval for substantial acquisitions and disposals
- there is a minimum market capitalisation for the main market
There are also differences in the vetting required of the admission documents and in the requirements for sponsors and nominated advisers.
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Where next?
Within Floating your company…
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