London AIM IPO Details

1. Is a Prospectus ever required for a London AIM IPO?

In rare circumstances where the offering is being made to more than 150 people who are not qualified (i.e. sophisticated) investors and the London AIM IPO amounts to more than €5 million.  A Prospectus must contain full disclosure as required by the Financial Conduct Authority’s Prospectus Rules and must be approved by the U.K. Listing Authority.

2. What type of document is typically required for a London AIM IPO?

An AIM Admission Document with the content requirements set out in the AIM Rules under the direction of the Nominated Adviser with no approval required from the U.K. Listing Authority.  The overarching goal of the AIM Admission Document is for London AIM investors to be able to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the prospective London AIM-listed company and the securities being offered.

3. How long is the AIM Admission Document?

AIM Admission Documents range from 50 - 250 pages with the average being approximately 100 pages.

4. What are the main sections of an AIM Admission Document?

There is a front section which summaries the salient points followed by a risk factors section, expert and/or competent person’s reports, financials which include audited accounts and often a pro forma statement of net assets and finally some general corporate information which includes details of the company’s share capital, material contracts entered into over the last two years and taxation considerations for prospective London AIM investors from various jurisdictions.

5. How is the AIM Admission Document circulated to prospective London AIM investors and what are the requirements for making it generally available?

The AIM Admission Document is circulated in the form of a Placing Proof to the institutional investors considering participation in the London AIM IPO.  The final AIM Admission Document does not need to be re-circulated but must be made available for at least one month following admission to London’s AIM.

6. Is the due diligence process more or less rigorous in the U.K.?

Generally speaking, more rigorous because the burden is shifted to the Nominated Adviser and Nominated Broker by virtue of the fact that there is no regulatory review.

7. Do Nominated Brokers underwrite London AIM IPOs and secondary offerings?

London AIM IPOs are typically done on a “best efforts” basis, although, this can be a point of negotiation between the company and the Nominated Broker  Even on a best efforts basis, the Nominated Broker is highly incentivized to complete the transaction since they are compensated on a success basis.

8. What are the lock up requirements on London's AIM?

The only formal lock up requirement on London’s AIM is that the directors and parties connected with them not sell their shares within one year of the London AIM IPO if the company is newly formed or has not been operating during the previous two years.  Market practice extends this concept to all companies completing IPOs on London’s AIM, although, this is a point that can be negotiated.

9. When does a company need to engage “experts” or “competent persons” in connection with admission to London's AIM?

If the company is in an extractive industry, such as mining or oil and gas, a third-party report from a "competent person" (i.e. a geologist) is required.  In all other instances, this is left to the discretion of the Nominated Adviser, however, if a company is involved in advanced technology, has a large Intellectual Property (IP) portfolio or is pursuing a novel business idea, the Nominated Adviser is likely to require the investigation and production of a report from a technology consulting expert, an IP attorney or business strategist, respectively.