The London Stock Exchange is seeking to expand the reach of its Alternative Investment Market deeper into continental Europe.

The LSE says it plans to develop AIM to accommodate the demand among small and medium sized companies across Europe for equity growth capital. To achieve this, the exchange will seek the support and commitment of the investment community in the other major European financial centres. It will develop a network of links with investors, advisors, intermediaries as well as the issuers themselves in markets across Europe.

Speaking at a UK Presidency and EU Commission Risk Capital Summit in London, Chris Gibson-Smith, the exchange’s chairman, said, “Our shared goal is a powerful, competitive Europe that shapes the future of the world rather than retreats from its challenges. The growth will require, in significant part, the creation of an efficient and flexible capital market. Europe’s ability to mobilise capital, distribute risk, and allocate funds to its most productive uses is a crucial test of its economic vitality.”

“We need to learn to allocate capital efficiently to the most active sectors of the economy – irrespective of national boundaries – especially to the smaller and medium sized companies that are responsible for two thirds of Europe’s employment and that have the capacity to grow faster and add jobs more quickly,” he added. “In order to achieve that goal Europe needs further to deepen its equity culture and to support a market structure capable of delivering efficient access to capital to these companies.”

“We believe AIM’s destiny is to provide Europe with its growth market, building sound foundations for enterprise and growth across Europe, stimulating new economic activity and reducing the cost of capital in the European economy,” he said.

“As I speak we are already engaged in discussions with investors, advisers and intermediaries to recreate in Europe the unique community that makes AIM so successful in London. Local nominated advisers across Europe will act as a pipeline for companies coming to AIM, and local member firms will provide liquidity, ongoing research and local distribution to investors. This should help to foster the entrepreneurial culture in Europe, with all the attendant benefits of economic growth and wealth creation that this brings.”

The announcement coincided with the publication Tuesday of independent research, conducted by Oxford Analytica, which estimates that the economic benefit of a truly pan-European market for SMEs would be in the range of a 0.3% to 0.6% uplift in EU GDP.