The UK’s Alternative Investment Market dominates the world’s venture markets, raising more than half the funds of all global growth markets combined in 2006, according to a new report from financial consulting firm Grant Thornton.

The firm reports that AIM’s success in attracting IPOs during 2006 helped it grow its average number of listed companies by over 300 and to raise more funds (over US$29 billion) than all the other venture markets combined.

During 2006, in terms of attracting new listings, AIM proved to be head and shoulders above other global growth markets, Grant Thornton said. It attracted 462 new admissions, over a quarter of these from abroad. It was also able to raise in excess of US$29 billion (in primary and secondary issues), increasing its overall market cap by around 80% to US$140 billion.

Overall, an analysis of 41 growth markets worldwide (19 in Europe, 15 in Asia Pacific, three in Africa and four in the Americas), revealed that beyond AIM, competition for listings is only provided by a small cluster of markets, but that their pace, compared to previous years, is gathering some momentum, the firm reported.

In terms of growth in the average number of listed entities, AIM’s startling performance was unmatched by any other growth market, with marginal gains experienced by Kosdaq, Sesdaq, the Mothers Market and Plus and small reductions by Gem and Nasdaq.

In terms of fundraising, AIM was again the clear leader, raising more money that all other markets combined. Its performance was followed by Nasdaq (US$17 billion) and TSX Venture Exchange (US$7.1 billion) which accounted for 26% and 12% of the total respectively. While Gem and Sesdaq also experienced growth in fundraising levels, the Mothers Market raised less than half the funds it did the previous year.

Highlighting other global market performance indicators, Grant Thornton’s analysis pointed to the TSX Venture Exchange also recording a market capitalisation increase of around 80% and alongside the Sesdaq and Gem exchanges experiencing share trading increases (measured by value) of 126%, 104% and 96% respectively.

“Globally, a mere handful of markets can be said to have truly succeeded in attracting new companies and in growing investor appeal beyond national borders. Nearly half of all markets worldwide still have less than 50 companies trading with some getting by with as little as one or two companies”, said Philip Secrett, international director capital markets at Grant Thornton UK LLP, in a release.

“However, AIM, TSX-V, Nasdaq, Kosdaq, Sesdaq, Gem, Plus, and to a lesser degree the Mothers Market have, albeit for very different reasons, undoubtedly delivered value for money, the pace of their improvements gathering some momentum,” he continued.

Commenting on AIM’s future opportunities and challenges, Secrett said, “While the statistics, when compared globally, still fail to highlight the performance of markets such as Scandinavia’s First North and France’s Alternext, both may become more noticeable over the next few years.”

First North is Europe’s second largest alternative marketplace with 69 companies and a market capitalisation of US$5.6 billion at the end of 2006. In 2006 it had an average trading volume of approx €90 million per day and 45 listings. Growing from 20 companies in 2005 to 75 in 2006, France’s Alternext now has a market cap of US$970 million.

“AIM’s battleground in the next few years will be mainly fought on three fronts. Clearly the retention of its appeal to UK based companies. Secondly attracting foreign listings, particularly from China and India, and thirdly succeeding in the elusive task of attracting more European companies to London,” Secrett added.

“This in particular is where First North and Alternext may grow to play a greater part. Historically, AIM has struggled to become the market of choice for European companies who have traditionally either looked domestically or chosen not to list at all. The London Stock Exchange’s proposed merger with Borsa Italiana may be the first stepping stone set to change this but clearly the recent improvements by Alternext and First North set a far more competitive scenario which should not be dismissed. I believe that in terms of appealing to a pan-European audience the race is still wide open,” concluded Secrett.