FINANCIAL MANAGEMENT

Financial Management



Financial Management

Part 1: Alternative Investment Market (AIM)

The AIM market is an international market for the mainly medium-sized companies and is actively growing. The AIM market is a unit of the London Stock Exchange (LSE). There are many companies for various activities, from relatively new companies at the early stage of development and based on venture capital, seeking to obtain additional financing and earn a reputation as a stable company for its further expansion to an already-established, mature companies seeking to reach a broader market the main market of the London Stock Exchange (LSE). Alternative Investment Market provides an opportunity to invest in risky new ventures, primarily the rapidly developing and using innovative technologies, with entry into the share capital or the purchase of debentures, bonds (Hatchick & Smith, 2002, 27).

History

It is traditionally the most significant amounts of venture capital financing have been characterized by U.S. stock markets. You can also note the stock exchanges in Vancouver and Toronto, specializing in providing venture capital mainly mining companies (for a large number of these exchanges projects, projects in the initial stage of its development, when there is mining, exploration and deposit funding) . But lately the market of venture capital has become a more significant role to play London Stock Exchange LSE, and to a greater extent due to exchange AIM (Alternative Investment Market).

Alternative Investment Market was created in 1995. Since then, more than 3,000 companies have placed their shares in this market. AIM is attractive for small and medium-sized enterprises to its flexible system of financial regulation and the lack of requirements for capitalization and number of issued shares. AIM offers a variety of start-up and small companies to raise capital in a regulated market in a reasonable conditions, so the AIM market has become a highly flexible public market with easy access to it for both the investor and the company. Subsequently, it was brought more than £ 60 billion pounds sterling GBP through an IPO on AIM companies and increase their capitalization. Some companies have shifted over time from a platform on the AIM London Stock Exchange main LSE. Although sometimes there is a trend that, conversely, some companies have transferred their shares to the main site on the LSE AIM (since AIM has significant tax benefits for investors, but also requires less regulatory burden for the companies themselves). So, in 2005, 40 companies have moved to the main LSE site on AIM, while only two companies have moved from AIM to LSE (Hatchick & Smith, 2002, 27).

Investing and trading

An important element of AIM is a model of its investors. Although the AIM market of the company have come are not startups, most of them small, are at an early stage of its development and, therefore, highly risky in terms of investing in them. It can be dangerous for inexperienced investors, who may lack the knowledge and resources to conduct proper research prospects for the company and its activities, or investors who are not ready for such a very high level of risk. As a result, AIM investor base consists mainly of institutional investors and large private investors. But now there is a tendency for the organization more accessible to trade on AIM and an increase in interest from smaller investors (Hatchick & Smith, 2002, ...