In a large, high-ceilinged office adorned with dark damask wallpaper, 59-year-old Chris Gilbert sits below two opulent chandeliers, talking with enthusiasm about the marble producing company he set up at the start of the year.

Although he has founded, built up and successfully sold a number of businesses, few people will have ever heard of Gilbert or his latest endeavor, Fox Marble, which he plans to float on London's Alternative Investment Market (AIM) in the near future.

Yet opposite him, at the other end of a long glass conference table, sits entrepreneur and former television star James Caan, whose decision to take a 9 percent stake in Fox is a marker of the ability of many small companies to continue to entice investors despite extremely jittery markets.

Stock market flotations across Europe have virtually ground to a halt as concerns over the euro zone debt crisis and economic growth wobbles hit confidence. London's main market hasn't seen a new listing since Ophir Energy in July.

During that same period however AIM, half of whose 1,156 companies each have a market capitalization of less than 25 million pounds ($39 million), has clocked up more than 15 initial public offerings (IPOs) including PeerTv, a manufacturer of digital set-top boxes and Radiant Growth Investments, an investment company looking at mining, oil and gas opportunities.

In the AIM market I can actually pick up the phone to Chris and say 'Chris, I notice last quarter's numbers don't look good, what is happening?', Pakistani-born millionaire Caan, who rose to fame on business reality television show Dragons' Den, said.

You feel a bit more aware of the investment you are making and I think a certain type of investors gain a great comfort from that environment, he told Reuters, glancing out over the grass-covered balcony of his office in London's upmarket Mayfair district.


Part of the London Stock Exchange and housed in the same building, a stone's throw from St Paul's Cathedral, AIM was launched in 1995 as a market for small and growing businesses from both the UK and further afield.

Since then, companies have raised more than 76 billion pounds on AIM, from both new listings and further fundraising, and kept coming throughout the financial crisis.

Initially it was seen as a stepping stone to the main market but since that it has become very much a market in its own right, said Marcus Stuttard, who took over as head of AIM in 2009. Over the last three years when market conditions have been tough ... companies on AIM have managed to continue to raise finance.

The smaller, more personal scale of its IPOs -- usually run by just one advisor rather than the entourage of investment banks that generally accompany blue-chip listings -- as well as greater flexibility over when to launch a sale is helping a steady trickle of firms defy the dismal market backdrop.

Because of advantages of the system and advantages of scale it is probably that bit easier to get them over the line in volatile markets, said Numis Securities corporate finance director Stuart Skinner, who has been involved in running a number of AIM floats this year.

The ability of smaller companies to offer potential backers greater access to their top executives is also working in their favor. The quality of a company's management is a key factor for any investors, and being able to spend more time discussing strategy and outlook with up-and-coming firms ahead of a float has helped support the steady stream of AIM listings.

Lighter regulatory requirements have also played a crucial part, those involved in fundraisings said.

Companies listing on London's main market must submit a prospectus for approval by the UK Listing Authority regulator, a process which takes around 4-6 weeks.

In contrast, AIM candidates only have to draw up an admission document, which is reviewed by their nominated advisor: essentially a sponsor who bears the responsibility of carrying out the necessary checks and liaising with the regulator and investors.

On AIM, you can do an IPO very quickly if you want to throw resource at it. That means you can be more nimble in terms of choosing when you want to launch, said Skinner.

AIM IPO candidates can also be more flexible on pricing and almost always open the order books for their share sales without publishing a fixed price range, unlike their main market counterparts.

This way they don't name a price until after receiving all the orders and avoid any negative press attached to cutting a previously-indicated target -- an all too common risk in tough investment climates. It can prove the final straw for listings that are already having trouble drumming up interest.


Many of the characteristics formerly seen as risky for investors now stand smaller companies in good stead.

Despite the adage that it is easier to pull in orders for large listings because of their liquidity, the smaller size of AIM listings works in their favor because they require fewer investors to fill their order book and get to market.

It has become slightly easier to do smaller fundraisings than larger, because in these markets if you can cover a book with half a dozen meetings and phone calls that is a great advantage, said Skinner.

Most companies will have done enough preliminary marketing ahead of launching an IPO to have a good idea of the likely level of demand, and even secure some advanced orders, he added.

Realistic targets and scaled-down operations also help. The average proceeds from AIM floats so far this year has fallen to around 11 million pounds, from around 21 million pounds in the same period last year, according to London Stock Exchange data.

Some companies have been sufficiently put off by the turbulent economic backdrop to postpone or cancel their AIM listings entirely.

But for others, the market is an increasingly important way to raise equity given the squeeze in lending to small and medium-sized companies across Europe as banks are battered by debt worries and the rising cost of servicing their own loans.

And against such a backdrop investors are weighing up the relative merits of smaller companies with little track record against blue-chips being buffeted by global recession fears.

Smaller, newer companies are attractive to investors as they are usually on a higher growth trajectory, says Maria Pinelli, global strategic growth markets leader at Ernst & Young. There is plenty of risk but higher reward. ($1 = 0.646 pound)

(Editing by Sophie Walker)