Pictured above: Richard Baker

AIM - the Alternative Investment Market - London Stock Exchange's international market for smaller growing companies, is fighting back, according to Richard Baker, a partner at the Midlands office of national audit, tax and advisory firm Crowe Clark Whitehill.

Since its inception 15 years ago a wide range of businesses, including early stage, venture capital backed along with more established companies, have joined AIM seeking access to growth capital.

However, the credit crunch, financial crisis and recession made it successively more difficult for small and medium sized concerns to raise external finance. Admissions to AIM dwindled and the number of companies on the market is down by about 30 per cent from its peak in 2007.

Last year there were some signs that earlier reports of the demise of AIM were premature. There were 102 admissions to the market, a considerable improvement to 2009.

Mr Baker said: "Although there are fewer companies on the market now than at the end of 2009, average market capitalisation of an AIM concern has increased from £43 million to £66 million. Funds raised on the market in the 12 months to the end of December increased by 60 per cent compared to the total funds raised in 2008.

"The UK needs a healthy market of smaller and growing companies and there are grounds for cautious optimism for prospects of further recovery in 2011."

However, there remained a skewing of funds towards oil and gas and mining companies - 55 per cent of total funds raised on AIM in 2010.

According to analysis commissioned by the LSE, UK incorporated AIM companies supported around 250,000 full-time equivalent jobs, larger than the level of employment in either the country's pharmaceuticals or defence industries.

"The wellbeing of the AIM market is important to UK plc," stressed Mr Baker.

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