PRINT THIS PAGE IPOs for European venture backed companies29/06/2005. Source: SJ Berwin. Perry Yam
SJ Berwin recently looked at AIM as an exit market for VC backed businesses, and reviewed the recent history of the market as it celebrates its 10th anniversary later this month. In this issue of AltAssets they review some options for continental European businesses - and their shareholders - that may be looking at raising money, or finding an exit route. The first option is AIM itself. But although it is an international market, with around 40% of the companies on the market coming from outside the UK, continental Europeans are under-represented.
There are some signs of increasing interest from those countries, and AIM itself is stepping up its marketing, so perhaps that will change. For some, the "fast track" procedure for companies already quoted on a "designated" overseas market - which was launched two years ago - may be of particular interest.
This offers an easier way for public companies to take advantage of a second quotation, and a streamlined admission procedure minimises the costs of accessing AIM's strong investor base, which includes all major UK institutional investors. So far only 19 issuers have followed this route (13 of them from Australia), but it is open to companies quoted on several European exchanges.
The other recent development is in France. Inspired by AIM, Alternext is the new market created by Euronext (initially in Paris) for small and medium sized companies, with a recommended minimum turnover of €8 million and a two-year track record.
Alternext is lightly regulated. Companies seeking admission do not need to be raising new money, although if they are not they must have completed a private placement in the last two years of at least €5 million with five "qualified" shareholders. Alternext companies are advised by a listing sponsor, who runs the IPO and ensures that the company complies with its disclosure requirements.
Although the admission criteria may be slightly tougher than AIM, which has no minimum turnover or track record requirements, there are clear parallels between the two markets. As yet, there are no tax breaks for shareholders (which have clearly helped AIM to become established), but the French venture capital association (AFIC) is already lobbying for some.
One company (MeilleurTaux, an on line mortgage broker) has already been admitted to trading and ten more are expected by the end of this summer.
Some point to the fragmentation of markets as a factor in holding back the development of a European NASDAQ, and there are clearly arguments that a multitude of exchanges is unhelpful. Some consolidation of Europe's capital markets looks inevitable, but in the meantime the options for Europe's high potential companies are once again growing.
Perry Yam
SJ Berwin is a pan-European law firm with a particular focus on private equity. It has offices in London, Frankfurt, Munich, Berlin, Madrid, Paris and Brussels. If you would like further information on its services to the private equity industry please contact Simon Witney in its London office +44 (0)20 7533 2222 or visit their website at www.sjberwin.com
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