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Luke Ahern, director of broking at Corporate Synergy, assesses factors that overseas companies coming to London should consider. London's role as an international financial centre, with its large pool of investment capital, both from institutional and individual investors, is being enhanced by the flood of international companies now having their shares quoted here particularly on the Alternative Investment Market (AIM). More than 120 of the 1,063 companies quoted on AIM are officially foreign; currently companies from Australia, Barbados, Belize, Bermuda, British Virgin Islands, Canada, Cayman Islands, Denmark, Falkland Islands, Germany, Israel, Italy, Luxembourg, Republic of Ireland and the USA are represented. In addition there are several others whose origins are overseas, such as in China and the former Russia Federation, whose registered offices are either in the Channel Islands or elsewhere in the UK. And AIM continues to grow, not just by the number of member companies, but also by its ability to raise capital. For example, in 2004, companies listed on AIM raised more than 4.6 billion. And, although January is traditionally a quieter month for fundraising, the first two months of 2005 have already seen 348.7 million secured. Delegations led by Martin Graham, head of AIM, have visited India, China, Russia and Australia in the past year, and there will be further trips this year, but more important, it seems AIM has set itself the target of becoming the European market for small and medium-sized companies. Plans are already in hand to build a Pan European shareholder base for AIM whereby a Belgian company, for instance, would have its prime listing on AIM and a Belgian investor would be able to invest in that company as easily as if the company were listed in Brussels with all share dealings settled in Belgium. Key to the programme is to appoint local nominated advisers and brokers, some of whom have been recruited already in Belgium and the Netherlands, to take on a similar role as their UK counterparts; once the system is seen to be working efficiently there are plans to take the concept to Germany, France and the rest of Europe. Interestingly the moves being made to encourage European companies and investors are similar to those that make UK investors more willing to invest in international companies here. A foreign company planning a quotation of its shares on AIM should always have the interest of the UK investor in mind if it wants to launch successfully. The first task therefore is to appoint a single adviser to combine the roles of nominated adviser and broker. Communications between advisers can be difficult, even without variations in language, culture and international time differences. There is no point in making things more complicated by appointing different firms to handle different aspects. Appointing respected UK advisers in these roles is also good news for UK investors, who will be more comfortable knowing that "foreign" companies will have to adhere to strict London Stock Exchange rules. Similarly, auditors and lawyers with international names and reputations should be appointed - such names will be fiercely protective of their brands and will not risk tarnishing them, thus providing an additional comfort factor to UK investors. Pricing of shares at the initial public offering is also an important factor and foreign companies should be prepared to offer their shares at a discount to similar UK businesses, they will soon pick up in value once investors accept there is no more risk attached than to an investment in a similar UK company. The appointment of a respected British director or (preferably directors to the board), who could be seen to be taking an active role, would be another move to allay investor fears. Foreign companies should also realise that there is still a major role to play in retaining investor confidence and support once they are quoted. This can take time and sometimes considerable effort to achieve, but can be rewarding in the long-term. It is crucial to appoint a reputable financial public relations company or investor relations agency, often they are one and the same thing, so that regular stories concerning the company are delivered to the very active and independent financial media in the UK. Regular stories in the investment press will help shareholders keep in touch with the company's progress, good or bad, for it is just as important for a negative event to be delivered in the most positive light as it is not to overplay a good story. If a company has its own web site, then this website should offer an English language version which can be used as an investor relations tool, keeping shareholders up to date. There are, too, key days for talking to shareholders such as reporting financial results or at annual meetings and it is important that the senior directors should be in the UK at such times and have time to engage in open dialogue with investors, potential investors and the media. Companies must make time to meet market participants face to face. If it is simply not possible to be in the UK at the time (and this isn't ideal), then arrangements should be on hand so that a senior spokesperson can be contacted. Depending on the type of company, it can prove very beneficial to invite analysts and financial journalists to visit a prime operational site where they can get to know both the company's management and its operations in less formal surroundings. The message, in a nutshell is: "Be ready to take advice and follow it. The City and UK shareholders have long-established conventions that have become part of best practice for good reason." Ideally, a foreign company with its shares quoted in London, should look and act like any other indigenous UK-listed business if it wants to reassure its shareholders.
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