PLUS predicts 'two-way traffic' with AIM

14/04/08 17:46

Small and medium sized businesses listed on AIM will soon be joining the PLUS-quoted market not just vice versa, claimed the PLUS Markets Group (PMG) today.

For some time now the PLUS has often been seen as a springboard or training ground by entrepreneurs that harbour ambitions to move on to AIM. However, now PMG believes the 'one-way traffic' situation is coming to an end and is speaking openly and directly about offering serious competition to the LSE.

The PLUS-quoted market has enough liquidity for both investors and entrepreneurs and is a good place for businesses to weather the economic storm, it said today.

The market is also suggesting that an increasing number of small and mid-sized businesses will leave AIM and join the PLUS quoted market as the market’s liquidity has improved and its costs are lower. Last year, The Shoprite Group, a UK-based company, became the first business to move from AIM to PLUS.

Simon Brickles, chief executive of PMG, says the previously he has had to fend off criticism from those who questioned the market’s liquidity and who doubted it could provide the investment that ambitious firms would require.

“The big objection I encountered time and time again was that liquidity didn’t move. If I had a pound for every time I heard that I would be a very rich man. But we have proven them wrong – liquidity does move,” he said.

Currently, the shares of AIM-listed companies can be traded on PLUS if those firms individually give their permission to do so. So far, 80 companies have done this, but Brickles says that this condition in onerous.

“If a company has already gone through the listing process and then you ask them to sign a piece of paper and say if 'anything on it is incorrect then you could be liable' then, of course, it puts them off,” he says.

However, the situation could change as the Treasury and the Financial Services Authority are now considering responding to demands from investors that the London Stock Exchange is fully opened up to competition.

This could lead to all of the 1700 AIM companies having their shares traded on PLUS. It is expected that a decision will be made later this year.