Understanding the Role and Importance of a Nominated Advisor (NOMAD)
A nominated advisor (NOMAD) is a financial services firm that assists with listing companies on the Alternative Investment Market (AIM) of the London Stock Exchange (LSE). AIM caters to smaller, higher-risk companies, offering them a marketplace with more flexible requirements while still ensuring compliance through the role of NOMADs.
Key Insights
- Guidance Specialist: A nominated advisor shepherds a company onto the LSE’s Alternative Investment Market (AIM).
- Corporate Finance Experts: Typically, NOMADs are boutique investment banks focused on corporate finance.
- Mandatory Requirement: Companies aiming to list on AIM must retain NOMADs, in compliance with LSE regulations.
- Ongoing Oversight: Post-listing, NOMADs continue to oversee companies to ensure adherence to AIM rules and provide strategic advice.
- Qualification Criteria: NOMADs must meet stringent criteria to earn approval.
Mechanism of a Nominated Advisor (NOMAD)
The AIM, established in 1995 by the London Stock Exchange, provides emerging growth companies an avenue to raise capital. Over 3,500 companies worldwide have benefited from the platform’s less rigorous listing requirements. However, retaining a NOMAD is mandatory for a company looking to list on AIM.
A NOMAD is a corporate finance advisor, typically a boutique investment bank, conducting in-depth due diligence to validate an AIM applicant’s suitability for the exchange. They assess factors like the business model, financial track record, executive competence, and capital structure before assisting the company in its AIM listing preparation and application. Following a successful listing, the NOMAD continues to act as a regulator, ensuring ongoing compliance with AIM rules and providing strategic advisory services.
NOMAD Qualifications
As of May 2022, there are 27 NOMADs approved by the LSE. To qualify as a NOMAD, an entity must:
- Be a firm or company, not an individual.
- Have a minimum of two years in corporate finance.
- Have acted as a financial advisor in at least three qualifying transactions within two years.
- Employ at least four qualified executives.
In addition to a NOMAD, companies aiming for AIM should consider engaging a broker, accountant, and legal adviser. Brokers, who must work for the same firm as the NOMAD, facilitate transactions by bringing buyers and sellers together. Accountants ensure financial compliance and assist in preparing necessary financial documents, while legal advisers provide verification and strategic guidance to the company’s board members.
Related Terms: Alternative Investment Market, Financial Advisor, Corporate Finance.
References
- London Stock Exchange. “Nominated Adviser Directory”.
- London Stock Exchange. “Role of Advisers on AIM”.
