The Hindu Business Line : `More Indian ventures may reach out to AIM next year'

London Stock Exchange, which is keen to present AIM, its platform for smaller, growth companies as a sensible option before Indian corporates, intends to woo them on the strength of sheer numbers — more equity offers, growth in market capitalisation and a quantum increase in the number of India-related companies. Mr Hugh Sandeman, Head of Business Development for India, LSE, answers a few queries.

How much do you think will be raised next year?

We really cannot hazard a guess. If the current trend continues, we may well see more Indian ventures reach out to AIM in 2007. It has already seen companies with operations in this country raise more than $1 billion. Infrastructure and real estate are both growing rapidly — these will need considerable funds in course of time. More than half-a-dozen companies have come to us this year.

How does India compare with China on this front?

There are over 40 Chinese companies with operations in China. In comparison, there are 10 India-related entities. The last one to arrive was a real estate outfit, which mobilised $340 million for investing in the rapidly growing Indian real estate market. Incidentally, a few other Asian countries are represented as well. As for the US, more than 50 companies have come on AIM in the last couple of years or so.

Of the 10, not too many are domiciled in India...

No, some of these are domiciled in the UK, while others are in Isle of Man and Cayman Islands. The point is there can be IPOs of businesses held by an Indian parent outside the country. Or even IPOs of shares in foreign outfits holding assets in India.

Listed Indian companies can also do follow-on GDRs. Last year, UK companies raised about $12 billion capital, both new and further. If you consider all overseas companies, $4 billion was raised in 2005. You may note that the Indian companies that have come to AIM represent diverse businesses. These actually include an entertainment company, one known for distribution of films.

What sort of liquidity issues that Indian companies are expected to face?

Liquidity on AIM is on the rise. Market capitalisation statistics make it clear that the last few years, beginning from, say, 2004, have been particularly encouraging. Values of shares traded have also moved up.

Some of the bigger AIM segments relate to mining, software/computer and support services. Internationally, mining companies account for about 26 per cent, while oil and gas producing companies, and industrial metals comprise roughly 20 per cent and 6 per cent, respectively.

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