At least 20 Irish companies could join London's Alternative Investment Market (AIM) before the end of the year, according to corporate finance house IBI.
Mr Ted Webb, who heads IBI's private-company business, said yesterday that the AIM, which forms part of the London Stock Exchange, could offer "significant opportunity" for many smaller Irish companies seeking to raise funds.
"I can immediately point to 30 with the characteristics," Mr Webb said, after addressing a breakfast briefing on the AIM at IBI's offices in Dublin. IBI is one of 76 nominated advisers for firms that want to list on the AIM.
Currently, just 12 Irish companies have listings on the market, which is designed to accommodate the funding requirements of younger, smaller companies that are not ready for a full listing on a main national market.
Mr Webb sees a strong pipeline coming from firms in the technology and medical devices sector over the next few months. "These are relatively young companies that have a management who don't have a fear of going into the public domain," said Mr Webb.
He pointed to companies in the medical area, for example, that have grown out of larger firms such as Boston Scientific or Elan. "There's still a significant need for equity funding to allow these companies to get from concept stage to market."
Technology companies that have come through "the war stories" of the technology boom are also good candidates for the market, according to Mr Webb.
He said he could see the number of Irish companies on the market to rise "north of 30" within three or four months. "That's a realistic number," he added, highlighting companies that need funding of between €5 and €15 million but have problems sourcing this with banks because they have a limited track record.
He argues that AIM also offers a better alternative than venture-capital funding because it can provide firms with greater liquidity.
The AIM currently has 846 listings on its books, with 76 of these coming from outside the UK.
The market has a lighter compliance load than, for example, the Irish Stock Exchange. On the flipside, it leaves previously-private firms open to public scrutiny of their performance. This has been felt by CNG, for example, which has seen its share price decline by 25 per cent since taking an initial listing in May.
Mr Ronnie Culliton, chief financial officer of CNG, who attended yesterday's briefing, attributed some of the drop in the firm's valuation to profit-taking among smaller investors.
He said, in retrospect, that the company could have avoided this by being "more clever" by asking smaller shareholders who wanted to sell to combine their holdings together so that larger blocks could be placed with institutions.
Mr Culliton explained that CNG's listing on AIM had cost about $7 million (€5.7 million), between direct fees and other costs attached to a failed acquisition that coincided with the move.
He said the firm had chosen the AIM over the technology-heavy Nasdaq exchange because of the investors that are attracted to the London market.
CNG's largest investor is Morgan Stanley, with JP Morgan also a holding a sizeable chunk.
