Hugh Sanderman in Calcutta on Tuesday. Picture by Kishor Roy Chowdhury

Calcutta, Dec. 5: London’s Alternate Investment Market (AIM) is turning out to be a happy hunting ground for companies to raise money to do business in India.

The total capital raised on this market crossed the billion-dollar mark in 2006 alone with 10 companies having operations in India now listed on AIM.

AIM is the London Stock Exchange’s (LSE) international market, specifically designed for smaller and growing companies.

“The response from Indian companies surprised us on the upside. We did not expect to get so many of them, given that exchange only began to market AIM in India regularly in 2005,” Hugh Sanderman, LSE’s head of business development for India, said.

Sanderman was here today to meet a clutch of companies and financial advisors.

Even though he declined to hazard a guess on what could be the level of appetite from Indian companies to list in AIM 2007, he said it is likely to be bigger than this year.

One of India’s largest real estate firms, Unitech, is planning to raise $700 million alone by listing its newly floated company there.

Consequently, the raising of funds by Indian companies is all set for a new record in 2007.

On the other hand, only three companies with interests in India raised about $75 million on AIM in 2005.

The 10 Indian companies already quoted on AIM come from diverse fields such as energy, mineral resources, real estate, infrastructure and hospitality.

For instance, K Raheja’s real estate project Ishaan Real Estate raised $ 340 million last month.

Another real estate fund, Trinity Capital, raised $450 million in April this year.

Sanderman said two types of companies could tap AIM, which encourages mid cap companies.

Companies planning aggressive international growth were likely to list their international arm on AIM, he pointed out.

Moreover, early stage companies with good asset class in pursuit of fund to grow business would also take keen interest in AIM, he added.

In order to help early stage companies to tap global market and wide range of investors, AIM provides certain incentives.

For instance, issuers do not have to have a three-year trading record, even as a strong promoter track record is essential.

There is no minimum free float either. Generally new companies target a free float of 10-15 per cent.

There are now almost 1,600 companies on AIM and since it started, $70 billion of equity capital has been raised on this market.