The European Council has adopted the listing act, aiming to keep EU companies in EU public capital markets. However, with Europe accounting for just 10% of IPOs globally in the past 12 months, some are concerned that the measures won’t be enough.
Under the act, rules for companies going through a listing process, or which are already listed on EU public markets, will be simplified. This will both reduce administrative costs and ensure transparency, investor protection and market integrity, the council stated.
Improving access to public markets and allowing for companies of all sizes to list on European stock exchanges will allow companies to better diversify and complement available sources of funding, the commission said, something it believes will be particularly beneficial for small- and medium-sized enterprises.
On the adoption, Gary Simmons, managing director for high yield and equity capital markets at the Association for Financial Markets in Europe (AFME), commented: “The adoption of the EU Listing Act package is a good step towards increasing Europe’s
attractiveness as a desirable location for companies to list.”
However, he added, “the package alone will not be enough to ensure that the EU is the best place for corporates to go public. In this respect, there is still some work to be done to boost Europe’s equity markets. AFME will work with its members and European policymakers to further progress, he affirmed.
The number of domestic companies listed on European exchanges has consistently dropped over recent years, from 7,225 in June 2022 to 7,007 in June 2023 and just 6,875 in 2024.
In the first six months of 2024, IPOs in Europe raised €11.5 billion, according to AFME’s Q2 primary markets and trading report. Although this marked a 385% percentage increase year-on-year, it still sits well below the H1 average since 2010 – €16 billion. Three years ago, in 2021, the average half-year issued amount was €20-40 billion. Since the end of June, a further $3 billion of European IPOs have been announced, according to Bloomberg data.
By currency, IPO listings are dominated by the US dollar, which accounts for 38% of global volume over the past 12 months, or $41 billion. While the euro held its own in the spring, even surpassing the dollar in May with more than US$3 billion in listings, emerging market currencies are an increasingly strong presence, Global Trading analysis shows. In September, US $4billion in completed IPOs were listed in Hong Kong dollars, and the Indian rupee has been gaining traction throughout the year. In August and September, the majority of IPOs were listed in emerging markets currencies – Europe is no longer just facing off against the US, as emerging markets soar.
The listing act package was first proposed in December 2022, providing a directive to amend the markets in financial instruments directive (MiFID) and repeal the listing directive, and a regulation to amend the existing prospectus, market abuse and markets in financial instruments (MiFIR) regulations.
It also included a directive on multiple-vote shares, intending to attract high-growth companies in the EU. A framework will be established for the issuance and use of such shares, in order to maintain shareholder protection.
Now that the council has approved the act, its measures will be published in the Official Journal of the European Union and come into force 20 days later – on 28 October. EU member states must bring the MiFID amendments into national legislation within 18 months, and the multiple-vote directive within two years.
©Markets Media Europe 2024
