Listing venues for high growth companies – using the capital markets as an alternative funding tool

Benjamin Leisinger
Homburger, Zurich
benjamin.leisinger@homburger.ch

Cintia Martins Costa
Elvinger Hoss, Luxembourg
cintiamartinscosta@elvingerhoss.lu

Cecil Quillen
Linklaters, London
cecil.quillen@linklaters.com

Report on joint session of the Securities Law Committee and the Capital Markets Forum at the IBA Annual Conference in Paris

Monday 30 October 2023

Session Chair

Keavy Ryan A&L Goodbody, Dublin; Associations and Committees Liaison Officer, Capital Markets Forum

Panellists

Peter Castellon Proskauer Rose, London
Samira Essebiyea Stifel, Paris
Niall Jones Euronext, Dublin
Nawal Ouzren Sensorion, Paris

The session, organised by the Capital Markets Forum (lead) and the Securities Law Committee, discussed the benefits of an initial public offering (IPO) and listing on a trading venue. Advantages include:

• management retains ‘control’;
• it is more permanent than some other funding tools;
• it is advantageous for obtaining financing from banks;
• listed shares are a good ‘currency’ in M&A transactions where the shares can be offered in exchange; and/or
• employees can be incentivised by shares with a real ‘exit’ opportunity.

Peter Castellon discussed the trend of listing in the United States, especially for non-US companies, and the ongoing obligations that come with it. The reasons for this trend are numerous, including access to (smart/specialised) funding, the Securities and Exchange Commission’s reputation as a competent regulator that addresses real issues and the market’s high confidence in the quality of the issuers who choose to list in the US.

Nawal Ouzren provided a ‘reality check’ regarding the implications of being a listed company; namely, that it’s important to keep in mind the potential increase in share price volatility if data does not meet expectations. She also highlighted the importance of certain aspects that become more significant when a company is listed, such as non-dilutive options and directors’ and officers’ (D&O) insurance.

Niall Jones presented Euronext’s ‘IPOready’ programme: a pre-IPO programme designed specifically for businesses that are ready to take the next step towards going public. The six-month pre-IPO educational programme provides executives with the tools and insights they need to achieve a successful IPO. As of the day of the conference, 140 companies had participated in 2022 and 120 in 2023. The programme's success is evident!

Samira Essebiyea addressed the issue of ‘overselling’ at the IPO and subsequent trading below book value or at a discount thereafter. Essebiyea also emphasised the importance of good disclosure and taking a longer perspective.

The panel then discussed the question of where to list and, inter alia, the pros and cons of listing locally versus abroad, the various free float requirements and other relevant aspects of listing. They also discussed alternatives to listing and provided examples of successful equity transactions in 2023.