SMS measures up as meter firm is latest to float on alternative market

Foy told The Scotsman that the 10m raised through the IPO would allow the company to secure a further 50m of lending from a group of banks including current partner Clydesdale.

He said the cash would allow SMS, founded in 1995, to develop its smart meter technology, which allows gas suppliers and customers to see exactly how much energy they're using, doing away with the need for estimated bills.

Energy regulator Ofgem requires some 300,000 industrial and commercial gas customers to switch to smart meters by 2014 - creating a 300m market, according to SMS.

Foy added: "Our technology is so simple to install, it literally takes just 30 seconds. We've chosen to float now because of the great opportunity that's in front of us with our smart meter."

SMS returned a profit of 2.2m in 2010 on turnover of 12.4m through its gas meter installation and maintenance business, which works with big suppliers including Scottish Gas-owner Centrica, Perth-based utilities giant Scottish & Southern Energy and gas producers Shell and Total.

Foy expects SMS to start paying a "small" dividend by the end of 2012 and promised a "progressive dividend policy".

He added: "We're very profitable and we expect that to continue. We've spent the past two weeks carrying out investor roadshows and we've been blown away by the response from the big institutions."

Foy said the firm's technology also had applications in the electricity and water metering markets.

Shares in SMS will start trading on London's alternative investment market (Aim) on 8 July, with its shares priced at 60p.

About 34 per cent of the company's stock will be available as a free float, with Timoney retaining a 30 per cent stake and Foy holding 16 per cent.

SMS is the first Scottish company to join Aim since January, when former Sigma Capital subsidiary Frontier IP - which helps universities to commercialise their inventions - transferred from the Plus stock market.

The last Scottish company to float on Aim was Duns-based Produce Investments, which raised 15m in November to fund the expansion of its Greenvale subsidiary, which already provides potatoes to supermarket chains Tesco and Sainsbury's.Produce Investments is expected to be joined on Aim later this month by Continental Farmers Group, an eastern European agricultural business set up by Forfar farmer Mark Laird.

Dundee-based dental technology firm 3D Diagnostic Imaging switched from Plus to Aim in November, while Fife-based shopfitter Havelock Europa moved from the main market to the junior exchange in July.

IPO markets have been volatile since the financial crisis, yet Switzerland-based commodities trader Glencore managed to pull off a record flotation last month, raising $10 billion (6.1bn) and propelling itself straight into the FTSE 100 index.