BioWorld International Correspondent

LONDON - London's Alternative Investment Market has proclaimed itself as the solution to the funding gap facing small, innovative companies across Europe and announced plans to extend its support network beyond the UK to the rest of the continent.

"Europe is crying out for a single equity market solution for smaller, growing companies," said Chris Gibson-Smith, chairman of the London Stock Exchange, which runs AIM. To provide that, the LSE will sponsor the development of a pan-European network of nominated advisers, or Nomads, that are accredited by the exchange.

Nomads stand as guarantors that companies they sponsor are suitable for admission to AIM, and act as intermediaries in the listing process. They then have ongoing responsibility to ensure the companies they sponsor comply with the regulations of AIM.

"We believe AIM's destiny is to provide Europe with its growth market," Gibson-Smith said.

Portentous as that might sound, AIM can claim to be the world's leading market for smaller companies. Since its launch in 1995, more than 2,000 have listed, raising almost £20 billion (US$35.1 billion). Currently, 1,318 companies are listed, including 200 from outside the UK, with a total market capitalization of £50 billion.

Ten years after its launch, the momentum around AIM is becoming unstoppable, Gibson-Smith said. In 2004, 100 million shares with a total value of £18 billion were traded. In the year to date, the value of shares traded is £30 billion, with the value of shares traded in August up 245 percent over August 2004.

The announcement of its expansion plans coincided with the publication of research commissioned by the LSE but carried out by an independent consultancy, Oxford Analytic, which estimated that creating a pan European market for smaller companies could increase Europe's combined gross domestic product by around 0.5 percent, or \50 billion (US$60.3 billion) per annum.

The study suggested that each \10 billion of venture capital investment annually would translate into 20 to 40 initial public offerings, if there was an effective natural exit route.

The ability to mobilize capital, distribute risk, and allocate funds to the most productive uses is a crucial test of Europe's economic vitality, Gibson-Smith told delegates at a European Commission Risk Capital Summit, held in London last week.

Other European exchanges have tried and failed to run markets for smaller companies. There are signs now of resurgence among some of those markets, but the risk is that it will lead to renewed fragmentation. That's not what Europe needs, he said.

"We need to learn to allocate capital efficiently, to the most active sectors of the economy - irrespective of national boundaries," he said.

Demonstrating that the appeal of AIM reaches companies far beyond the UK and Europe, Beximco Pharmaceutical Ltd., of Dharka, Bangladesh, announced it is to list on the London market, raising £12 million. The company manufactures generic drugs, active pharmaceutical ingredients and intravenous fluids, and has contract manufacturing deals with GlaxoSmithKline plc and Novartis AG.

Beximco said the money would be used to increase manufacturing capacity, expand the product range, and develop international marketing and sales infrastructure.