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The Italian stock exchange

The various stock markets are a primary exit option for venture capital investments. The stronger the market, the better the chance of generating a higher return on investment. This article from AIFI – The Italian venture capital association – looks at the developments and changes in the Italian stock exchange over the last few years.

Historical background

In 1998 the Italian Stock Exchange completed its privatisation process. This contributed to a redefinition of its purposes and objectives. This process, together with the introduction of the euro and the resulting decrease in Italian interest rates, led to a revitalisation of this institution. It is now implementing a re-organisation plan, with the introduction of new specialised markets and services.

In July 1996, the ‘Euroism' decree established the self-regulation and privatisation of the stock exchange and, in September 1997, the privatisation of the Italian stock exchange occurred. On 2 January 1998, Borsa Italiana started operating as an SRO (self-regulatory organisation) and new market rules were enforced.

The powers attributed to Borsa Italiana under these arrangements concern admission for listing; stock cancellation and suspension; intermediaries admission; suspension and cancellation of intermediaries; market organisation and surveillance rules.

During 1999 Borsa Italiana continued its development: among other initiatives, it incorporated the MIF and launched the Nuovo Mercato and the EuroMOT, thus extending its activities in derivatives, equities and fixed income respectively.

Requirements for admission to the Main List (Mercato di Borsa)

Issuer's requirements

• Publishing of the three latest sets of accounts, and auditing of the latest one 
• Demonstrated ability of generating revenues autonomously

Shares' requirements 

• Free marketability of shares 
• Minimum float: 25 per cent of capital 
• Minimum market capitalisation: E5.17m

The admission may only occur upon request by the issuing company. Borsa Italiana is committed to granting admission within two months, communicating it to Consob (the Italian stock exchange authority) and publishing it in its own notices (before the privatisation, the procedure took an average of six months).

Borsa Italiana performance

In 1999 the Italian stock exchange continued the good performance of the previous years, with its all-share index, MIB, reaching 28,169 at year end (+22 per cent compared with the value at the end of 1998).

In 1999 the overall market capitalisation (Borsa, Nuovo Mercato and Mercato Ristretto) reached a record E727bn, equivalent to 66.4 per cent of Italian GDP (45.7 per cent at the end of 1998).

Volumes traded increased significantly (+18.5 per cent) to a new record. The average daily trading volume during 1999 was in excess of E2bn.

During 1999, 38 companies were admitted to the Borsa Italiana's markets. The total number of listed companies at year-end was 270 (247 on the Borsa, 6 on the Nuovo Mercato and 17 on the Mercato Ristretto).

Italian stock exchange - highlights of the main market

There were 21 IPOs during the year leading to listings on the Borsa Italiana markets (ACEA, ACSM, Banca MPS, Banca Profilo, Basic Net, Credito Artigiano, Ducati Motor Holding, ENEL, Filatura di Pollone, Finmatica, Grandi Navi Veloci, Gruppo Coin, lnterbanca, Italdesign Giugiaro, Marcolin, Mirato, Olidata, Permasteelisa, Roncadin, Trevi, Vemer Elettronica), plus two companies moving from the Mercato Ristretto to the main list. The remaining listings are the result of demergers, dual listings of foreign companies and other corporate finance transactions.

The good performance of the stock exchange in 1999 positively influenced Borsa Italiana's ranking among exchanges. At year-end, Borsa Italiana was fourth in Europe in terms of capitalisation and volumes.

The Nuovo Mercato

Borsa Italiana is more and more focused on transforming the stock exchange into an increasingly active player in the Italian and international financial markets.

At the beginning of 1999, the Borsa Italiana launched the Nuovo Mercato for small and medium enterprises in order to help high-growth companies access the market.

Target companies for this market are:

- young companies, with significant financial needs connected with development projects

- innovative and high-tech companies intent on developing new products or services

- companies in more traditional industries but with high growth prospects

- companies listed on other markets looking to enlarge their shareholders base

The Nuovo Mercato is part of the EuroNM, a European network of exchanges dedicated to high growth stocks.

Here below are the main requirements for admission to the Nuovo Mercato.

Requirements for admission to the Nuovo Mercato

• No minimum requirement in terms of income, turnover and activities
• Minimum float: 20 per cent of capital 
• Minimum public offering: E2.
• Minimum net worth: E1.3m 
• ‘Lock-in' option for the manager/entrepreneurs shareholder (1 year)
• Commitment of the specialist to ensuring liquidity to shares 
• High quality and widespread information disclosure

The creation of new and specialised markets, in line with the European trends, together with the harmonisation of the listing and trading rules with the best practice world-wide, are some of the critical objectives which lead us to believe that this institution has finally started to play a modern role in the Italian economic environment.

Extracted from the AIFI Yearbook 2000

The Italian Venture Capital and Private Equity Association (AIFI) promotes, develops and represents institutional, venture capital and private equity activity in Italy. The organisation is composed of private equity and venture capital investors who purchase, manage and divest unquoted companies.

Copyright © AIFI 2000