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AIM high

Kerman & Co’s Daniel O’Connell reviews the work of the law firm’s AIM team and evaluates the issues surrounding the market in the past 12 months

This has again been a busy year for Kermans’ AIM team. The firm has acted on the admission of several investment companies, including Bramlin, Leni Gas & Oil plc and Templar Minerals, which are looking at investing and acquiring businesses in the energy, mineral and mining sectors.

More recently, we have supported Internet investor Hecta Media on its AIM IPO, which valued the business at £6.5 million and will enable it to continue its consolidation strategy. It also worked on secondary issues for Metals Exploration and Leni Gas & Oil, as well as for BDI Mining Corporation on its takeover by LSE-listed Gem Diamonds of South Africa.

Last month, Kermans listed Niger Uranium, Polo Resources and CBM Oil on PLUS Markets. The firm has just recently acted for Summit Resources, now Atlantic Coal, on its re-admission to AIM following its acquisition of the Stockton Coal Group in Pennsylvania, and for Leni Gas & Oil as part of its takeover of Compagnine Petrolifera De Sedano. In addition, it has represented Rodeo Developments and its shareholders on its recent acquisition by Bramlin and proposed re-admission to AIM. Other recent highlights include Templar’s acquisition of the Adjara gold project in Georgia and stockbroker Hichens, Harrison & Co buying ARM Corporate Finance.

Kermans has also raised additional finance for several AIM companies by way of bond issues, syndicated loans, bridging loans and credit facilities.

AIM continues to attract companies and investors from around the world. There are now more than 250 companies incorporated outside the UK quoted on AIM, and this number is rising. Although the challenge to the market from the US, and in particular NASDAQ, has faded, the consequence of this is arguably a more robust regulatory environment. An example of this is the introduction of the rules for nominated advisers, which has formally codified their responsibilities.

The much reported credit crunch appears to be biting. Speculative investment has tailed off and some companies are struggling to raise finance either prior to or on admission to AIM. That said, there is still an appetite amongst some investors for cash shells that have a strong management team with a proven track record.

Apart from the impact of the credit crunch, we have seen our client companies experiencing the effects of obvious sector-specific factors. AIM exploration and production companies in the oil and gas sector continue to benefit from the surge in oil prices. This is due not only to the weakening dollar, but also concerns about global supplies. Another factor is the threat by some government’s to review existing licence arrangements.

The demand for industrial metals, particularly from China and India, continues to be strong. Sector consolidation is set to continue with the BHP Billiton £120 billion ($252 billion) offer for Rio Tinto being the most dramatic recent example. This level of activity is reflected by the continuing stream of AIM admissions and related placings in the sector. The growing awareness and support for environmental issues has led to more companies in the alternative energy sector coming to the market. I believe this trend is likely to continue.

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