Some 70-75 businesspeople, attorneys and officials attended a seminar on raising capital on the London Stock Exchange's AIM market. Left to right: John Schneider, partner, Hunton & Williams; Jorge Fernandez, vice president of global commerce, Metro Atlanta Chamber of Commerce; Richard Webster-Smith, business development manager, London Stock Exchange; and James Comerford, counsel, Hunton & Williams. Photos courtesy of Cookerly Public Relations.

Lord Mayor David Lewis (left) addressed Georgia businesses about the AIM exchange and opportunities for growing companies to raise global capital.  Also pictured are Attorney James Comerford (center), of Hunton & Williams LLP's Atlanta office and Sean Murphy, co-founder of Norcross-based Canvas Systems.

London financial officials visited Atlanta on July 29 to outline how small, internationally focused firms can benefit from publicly listing their company on a niche market of the London Stock Exchange.

Formerly called the Alternative Investment Market, the AIM was specifically designed and launched by the exchange in 1995 to help growth-oriented companies raise global capital. 

As the AIM has achieved success, many American firms have begun to consider it as an alternative to more expensive, heavily regulated American markets like NASDAQ and the New York Stock Exchange.

Of the more than 2,900 companies listed on the AIM, 75 operate in the U.S., the most in any country other than the U.K.  These firms have raised some $4.2 billion on the AIM and represent more than $14 billion in market value.  Over the last year, 13 U.S. firms have joined the AIM.

Lord Mayor David Lewis, the top government official of the City of London Corp., led the delegation of business leaders that shared their broad range of experience with regard to the AIM.  

Mr. Lewis’ job is distinct from the mayor of Greater London, who governs the wider metropolitan area.

In addition to many other ceremonial functions and civic duties, Mr. Lewis is entrusted with the task of promoting the U.K. capital’s financial services abroad during his one-year term.

He said London’s global investor community and vast system of advisers, analysts, lawyers and accountants make it the world’s prime financial crossroads.

That atmosphere can only help AIM-listed companies, he told GlobalAtlanta in an e-mail.

“This means the AIM market here can provide growth capital for small- and medium-sized companies in the early stage of their life cycle and crucially gives AIM-listed companies a chance to be exposed to really high-quality professional institutional investors,” he said.

He said the AIM is a particularly strong market for companies involved in renewable energy, clean technology and natural resources.

Georgia aims to become a leader in alternative fuels, particularly the process of turning biomass from crop waste and timber byproducts into ethanol. 

Currently, there are no companies based or operating in Georgia listed on the AIM, but the U.K. delegates at the Metro Atlanta Chamber of Commerce addressed the process by which they could gain access to that market.

About 70-75 people packed the room, according to John Schneider, a partner at international law firm Hunton & Williams LLP’s Atlanta office.  

The firm co-sponsored the event and is putting on similar functions in New York and Charlotte, N.C., in response to its clients’ concerns over constraints in traditional U.S. stock markets.

“What we tried to bring together is all the pieces of the puzzle” that companies would need to know to tap into the AIM’s advantages, Mr. Schneider said.

Smaller, newer companies sometimes have trouble listing in U.S. markets because of the strict regulatory review and capital thresholds they must satisfy, he said.

The AIM has no minimum size requirement, no financial history prerequisites and no minimum capital flow that would need to be held in public hands, Mr. Schneider told GlobalAtlanta.

Institutional investors—globally recognized brand names like Black Rock, Merrill Lynch, Invesco, Axa and Fidelity—form the backbone of the market, providing smaller companies with potential access to a large pool of capital they likely wouldn’t get by courting private equity investors.

“Right now in the current environment it’s tough for a small company to get the attention of a private equity investor,” Mr. Schneider said.  “You can tell your story more freely with the AIM listing and shape your story with the investor pool and work with some capital sources that are more sophisticated.”

Another draw is that companies face fewer regulatory hurdles than in the bureaucratic Securities and Exchange Commission registration process.

In the AIM, registration is controlled and vetted by appointed nominated advisers, called “nomads,” who take responsibility for a company’s listing process in lieu of government regulatory officials.

Under that framework the entire transaction generally takes three to four months, rather than seven to nine months or more with the SEC, Mr. Schneider said.

For that reason and several other economic factors, an alternative energy company operating in Georgia is considering entering the AIM to determine the value of the company for an upcoming mergers-and-acquisitions campaign. 

Bell Bio-Energy Inc. in Tifton has developed a process by which genetically altered bacteria break down biomass from city trash or agricultural and forestry waste into hydrocarbons that can be turned into fuel.

J.C. Bell, an agricultural innovator and CEO of the company, is a client of Hunton & Williams, and he said the firm has been helping him evaluate which stock market would best suit his company’s needs.

After attending the seminar in Atlanta, Mr. Bell said he better understands the exact process his company would go through to list on the AIM in order to check its value.

“We will use that value to acquire other companies to help us to grow faster and faster,” he said.

He told GlobalAtlanta that to list his company on NASDAQ would cost him hundreds of thousands of dollars more than the AIM, and it would probably take three times as long to register.

For Bell Bio-Energy, timing is important.  On the same day as the seminar, the U.S. Department of Defense announced that it would allow Mr. Bell’s company to place seven demonstration facilities on federal government properties in six states. 

The sites will provide real-world conditions necessary to research the engineering methods Bell will need to use to mass-produce the fuel.

In six to nine months, Mr. Bell said he hopes to begin building full-scale production facilities, including one near Atlanta, which initially will turn out 500,000 barrels of hydrocarbon fuel per day.

In addition to the relaxed regulatory scheme, Mr. Bell said the AIM market is close to London’s carbon trading market, a concept still underdeveloped in the U.S. but important to his company’s future.

“We will be producing about 200 tons of carbon credits per year.  The difference in trading them on the New York Stock Exchange and London is tremendous,” he said.

Officials from the NYSE and the SEC have derided AIM for its lighter regulatory framework.  

If U.S. companies investing on the AIM don’t have international operations, they run the risk of being criticized for simply trying to avoid U.S. reporting standards and disclosure requirements, said Dan Kolber, a shareholder in the Atlanta office of law firm Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.

Mr. Kolber said these criticisms have a basis and that U.S. firms should proceed with caution into new markets.

But he said that there’s an element of risk on every market, and the AIM provides a platform for start-ups to raise capital that otherwise wouldn’t be possible.

“There’s no other way to create that value so quickly than to form a robust market,” Mr. Kolber said.