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AIM is fast becoming a truly international marketplace. Canadian mining entrepreneur Glenn Laing is busy working to raise £2 million through broker Insinger de Beaufort for his Vancouver-based company Sanatana Diamonds, to pursue gem projects in north-west Canada’s Mackenzie Delta in a joint venture with the mighty Rio Tinto resources giant.

Another broker, Charles Stanley, has been seeking to raise £13 million on London’s junior stock market for Radicle Projects, an Australian agricultural business set up to exploit tax breaks Down Under for forestry, horticulture and wine growing projects. The company has started already with a forestry plantation in Queensland.

A hemisphere away, Israeli industrialist Aik Rosenberg has successfully raised £10.5 million at 130p on AIM with the help of broker Durlacher for speciality chemicals and powdered metals pioneer Metal-Tech. He exudes optimism about prospects for his company’s ‘hydrometallurgy’ process in both cutting mining costs and enhancing the environment.

At the same time, another Israeli, Arie Laor, and adviser Nabarro Wells have been putting the finishing touches to a £2 million AIM float at 25p for patented coatings specialist Greenkote. From another end of the earth, Hong Kong entrepreneur Tony Tong plans to raise £15 million through an AIM placing led by Evolution Securities for Asian Citrus, China’s largest orange grower with extensive plantations in the Guangxi Zhuang region.

These companies are among the latest arrivals swelling the tide of foreign companies coming to AIM into a veritable flood.

They are coming to the market to tap London’s internationally-minded investment community for funds and to establish a platform for stimulating public awareness and for launching possible corporate deals. On the other side of the fence, AIM investors have so far been happy, despite the currency risks, to back its overseas entrants, which collectively rose 99.4 per cent in value in the 12 months to the end of May, a gain which at least partly reflects the presence of so many resource companies in the foreign AIM contingent.

Why AIM pulls them in

As the AIM market celebrates its 10th anniversary, with £16 billion raised for 1,800 companies over that period, its comparative ease of access and, crucially, its continuing liquidity, have enhanced its appeal to entrepreneurs from abroad. For them, America’s Nasdaq is too large-scale, while previous continental European rivals, such as Germany’s ill-fated Neuer Markt, are no longer around.

AIM does not require companies to have a long history of corporate solidity. Instead, its rules place the burden of checking and vouching for them and their directors and backers on their nominated advisers.

According to AIM spokesmen, the number of international companies quoted on the junior market has doubled in a year to 144, the majority with market price tags ranging from £20 million to £100 million and above. Stimulating this trend has been AIM’s ‘fast-track’ admissions system, which exempts new applicants from the obligation to produce (and prepare and pay for) any admission document provided they have been listed for at least 18 months to one of eight ‘designated’ overseas stock exchanges: Australia, Euronext, Deutsche Borse, Johannesburg, Nasdaq, Sweden, Switzerland and Toronto.

‘Raising money on AIM is like doing a private placing in a public market,’ comments Metal-Tech’s Rosenberg. He reinforces the views of other heads of companies with potential international appeal, when he explains why he is giving a wide berth to America’s Nasdaq, which played such a key role in raising institutional and private investors’ money during the dotcom boom.

The US Sarbanes-Oxley legislation on corporate governance is seen as imposing such daunting, expensive and time-consuming obligations on companies and their directors that the expense and risk of a Nasdaq quote are hard to justify. Moreover, investors in that market probably would not be interested in the small fry which is AIM’s staple: ‘you only go to Nasdaq for $200 million [£111 million] or more,’ argues Rosenberg.

It costs less to join AIM than the Full List, though not as much less as some would like. Louis de Castro of Insinger reckons it should cost an average applicant about £300,000, plus a three to five per cent commission, with a nominated adviser’s fee of £100,000 to £120,000 and lawyer’s costs of up to £80,000. A fast track application will cost about two-thirds of that total, ‘if you do it properly’.

Where they come from

Just as internet companies led the last AIM boom, so resources companies have been in the vanguard of its more recent adventures, whose prospects for continuance and revival are currently the focus of keen debate. Since most natural resources are found abroad, most of the companies looking for them or seeking to finance their exploitation are also international.

Hence, resource companies, particularly from Australia and Canada, have featured prominently among the overseas AIM counters – though their stock market performances have varied sharply. According to AIM, mining companies account for 40 per cent of the value of its international list, and oil and gas counters represent another 38 per cent, while resource-rich countries Australia, Canada and Ireland are respectively home to 23 per cent, 20 per cent and 13 per cent of the international valuation (before adding in a few companies domiciled in tax havens).

Toronto-quoted Centurion Energy commands a strong £489 million price tag on the strength of oil and gas prospects in Tunisia and Egypt. By contrast, fellow Albertan First Calgary Petroleum, even at £618 million, has lost 60 per cent of its peak value on the failure of its own Algerian assets to produce a hoped-for bid.

Copper projects in Zambia and Congo and gold elsewhere in West Africa have given Toronto-quoted First Quantum Minerals a market value of £615 million, more than six times its 2001 AIM float level, though below its all-time peak. Others have foundered or nearly done so, reminding investors forcefully of the risks inherent in the mining game — while Toronto-quoted Canaccord Capital, the investment group headed by colourful veteran Tim Hoare which brought First Quantum and many others to the market, has obtained a parallel listing on AIM for itself.

There are still plenty of companies keen to have a go, though their fundraising targets tend to be more modest than they would have been even a few months ago. ARM Corporate Finance is advising Thor Mining, a spin-off from Aussie-quoted Tennent Creek, on raising £1.8 million at 2p to develop the Molyhil molybdenum and tungsten deposit in Australia’s Northern Territory.

Last month, Toronto and Nasdaq-quoted Caledonia Mining Corporation announced plans to tap AIM with a £1.57 million placing at 4.5p, handled by broker Seymour Pierce. Chief executive officer Stefan Hayden, who has a letter of intent from a major cobalt producer, wants to advance exploration at the Rooipoort platinum project in South Africa and the Mulonga Plain diamond venture and Nama cobalt project in Zambia and invest in gold production at the Barbrook mine in South Africa.

Away from mining and drilling, Nabarro Wells is also helping Joachim Hauser, an architectural consultant and former member of the German Aerosopace Administration, bring Crescent Hydropolis to AIM after a £2.7 million placing at 40p. Run by chief executive Mansoor Jiaz a former hedge fund manager, Manx-domiciled Crescent hopes to offer ‘high-class tourist accommodation of a high standard with access to the underwater world’ and is negotiating with the Dubai government over a project at the Gulf state’s Jumeirah beach in association with German electronics giant Siemens.

Israel is ‘crazy for AIM’

By the end of May, Israel accounted for six per cent of the value of overseas companies on AIM and that percentage is likely to increase. Rosenberg insists there are many more where Metal-Tech (down 10p since its float) and Greenkote come from. ‘I can think of five companies just now,’ he hints, claiming that Israel’s business community is ‘crazy for AIM’ these days.

AIM offers Israeli entrepreneurs access to a market that is both receptive to some of the new technology coming out of Israel and provides enough liquidity for the trading-minded investors in Tel Aviv to chance their arm. But as with resource companies, not all will perform equally well and several, it seems, have been pulled at the last minute.

One Israeli group, Telit Communications, recently came to tap AIM investors for £20 million at 140p to back its production of cellular handsets and machinery for automatic meter reading and vending machine stock control. Chief executive Oozi Cats was successful in coaxing funds from UK investors, though the shares have fallen to 116.5p since flotation.

Foreign companies on AIM are bound to be speculative, with currencies adding an obvious extra risk to the others. Bold punters might consider a flutter in Greenkote, Sanatana, Metal-Tech, Caledonia or even Crescent, though rewards may take a while to come.