Instutional Investor on (among other things) the impact of Sarbanes-Oxley

For Clara Furse, defending the London Stock Exchange from unwanted suitors has become practically a full-time job — and one at which she excels. Late last month the CEO fended off the third hostile bidder in a little more than a year when Nasdaq withdrew its GBP 2.4 billion (USD 4.2 billion) takeover offer for the LSE. Few bankers believe it will be the last such attempt.At least one LSE executive is managing to stay focused on his day job amid all the takeover speculation. Martin Graham, head of the Alternative Investment Market — the LSE junior market that is attracting small issuers from Kiev to Jiangxi — wants to make AIM the leading global marketplace for small, growing companies. He believes he can fulfill that vision whether the LSE stays independent or not.

The reason? AIM’s rapidly expanding market includes an increasing number of U.S. companies, many of which are seeking to avoid the tough, costly reporting requirements of the Sarbanes-Oxley Act. Nineteen U.S. companies listed on AIM last year (and raised USD 2.1 billion), up from eight in 2004. Altogether 519 companies raised GBP 6.5 billion through initial public offerings on AIM in 2005 — compared with GBP 10.7 billion in IPOs on London’s main market. AIM now boasts 1,426 listed companies with a combined market capitalization of GBP 65 billion. “If your market cap is less than USD 400 million, you can’t make the compliance bill stack up financially,” says Graham, 43, a former global head of equity sales at WestLB Panmure and Dresdner Kleinwort Benson who joined the LSE in 2003.

Graham has a knack for backing winners. He grew up near Newbury Racecourse in Berkshire, west of London, and claims he put himself through the London School of Economics by betting on the ponies and writing for racing magazines. With several friends in London’s financial community, he formed a syndicate called the Perspicacious Punters Racing Club, which owns two horses and has won 30 races over the past 20 years. “That’s pretty good when you consider that 85 percent of owners never have a winner,” he says.


Source: Institutional Investor, April 2006, p.9 (Highlighting added.)

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