Nicolas Meunier
Head of Post-Listing Advisory

In each newsletter, our Post-Listing Advisory team shares some insights to support your journey on capital markets. Our first market insight is on biotechs.

Despite lower amounts of capital raised by listed biotechs on equity capital markets in the year to date (€547 million), we believe that the sector will attract investors again. This confidence is illustrated by the Next Biotech Index, which has recovered from its Q4 18 low. Investors are demanding quality and market capitalisation is concentrated around mid-sized and large companies. We have seen some divergence between the US and Europe, due to structural listing-related factors.

Maturing clinical portfolios, more frequent positive news and an increased investor population are the first positive signals observed in the sector after several months.

Our Biotech Barometer released earlier this month describes these encouraging trends around one of the most innovative sectors on Euronext.

Euronext’s Post-Listing Advisory team gives three pieces of advice for biotech executives in the current environment:

1. Reinforce your local investor base to be resilient against asset reallocation trends
2. Choose the right capital structure for your business, and consider the benefits of both dilutive and non-dilutive financing to allow you to match investors’ allocation trends
3. Know your investors: take any opportunity to talk with them, anticipate their expectations and investment strategies, but also provide them with your own valuable and scientific read across the biotech sector

Since 21 July 2019, the new EU Prospectus Regulation has applied in full. As you explore the changes brought by this new legislation, here is some information to guide you through the key modifications and help you understand the new regime.

What is the Prospectus Regulation?

The Prospectus Regulation (Regulation (EU) 2017/1129)^[1] is an EU regulation that sets out the revised regime for the prospectus that must be published by a company when its securities (whether equities or non-equities) are offered to the public or are admitted to trading on a regulated market. While some of the provisions included in the regulation have already taken effect, the complete Prospectus Regulation applies as from 21 July 2019.

 

What is it for?

The Prospectus Regulation aims to help companies gain better access to capital markets to finance their growth by simplifying and streamlining how to present information to investors and regulatory authorities in a more cost-effective way, especially for small and medium-sized companies

The new legislation is also a significant milestone in the implementation of the Capital Markets Union (CMU), which aims to establish an integrated capital market in the European Union.

The Prospectus Regulation does not apply retrospectively: prospectuses approved by relevant authorities under the previous regime will remain valid.

 

What are the main changes?

The key changes arising from the provisions that applied as from 21 July 2019 include the following^[2]

 

1. Introduction of an EU Growth Prospectus

The EU Growth Prospectus is a tailored prospectus for SMEs.

The following types of company may choose to draw up an EU Growth prospectus, provided that they have no securities admitted to trading on a regulated market:

• companies which meet at least two of the three following criteria:

• an average number of employees of less than 250
• a total balance sheet not exceeding €43 million
• an annual net turnover not exceeding €50 million;

• companies with market capitalisation of less than €200 million or;
• companies with a market capitalisation of less than €500m and with securities traded on a SME Growth market^[3].

With its simplified and proportionate approach, the EU Growth Prospectus aims to make it easier and less costly for these companies to access capital markets.

 

2. Introduction of a simplified prospectus for secondary issuances

The Prospectus Regulation introduces a simplified prospectus for companies that have had securities admitted to trading on a regulated market or an SME growth market continuously for at least 18 months, and that wish to issue additional shares or raise debt (secondary issuance).

The simplified prospectus aims to be a time-saving tool for companies already familiar with capital markets who are seeking additional financing.

 

3. Introduction of a Universal Registration Document to secure fast-track approval from supervisors

The Prospectus Regulation introduces the Universal Registration Document (URD), established on an optional basis every year by companies which have securities admitted to trading on a regulated market or an MTF, and which decide to draw up their prospectus as separate documents.

A URD describes the company’s organisation, business, financial position, earnings and prospects, governance and shareholding structure.

The URD aims to become a useful tool for companies that repeatedly raise financing on capital markets. An issuer that has filed and received approval for a URD for two consecutive years is permitted to file its subsequent URD without prior approval. The issuer is then described as a 'frequent issuer'. Also, a frequent issuer that submits an URD for approval can benefit from a faster prospectus approval process – reduced from 10 to 5 working days.

 

4. Other key changes

The updated disclosure rules also limit the number of risks that can be included in the summary and restrict the summary length to 7 pages.  In addition, the risk factors in the prospectus must be limited to risks which are specific to the issuer and/or to the securities and which are material for making an informed investment decision.

The Prospectus Regulation inaugurates a European online database, operated free of charge by the European Securities and Markets Authority (ESMA) and containing all prospectuses approved in the European Economic Area. This database will help you easily review other companies’ prospectuses to facilitate the drafting of your own prospectus.

 

Who is your point of contact?

If you would like to find out more or have any questions, please contact your national competent authority, your legal advisor or your Euronext account manager.  

Resource Centre:

Official Journal of the European Union

Links to implementing and delegated acts for prospectus regulation

Guidelines to risk factors

Questions and Answers on the Prospectus Regulation

 

[1] The Prospectus Regulation was published in the Official Journal of the European Union on 30 June 2017.

[2] Some provisions of the Prospectus Regulation are applicable since 21 July 2017 and 21 July 2018. These provisions will not be presented in the present communication.

[3] SME Growth market is a new status introduced under MiFID II and designed to facilitate access to capital markets for SMEs. Euronext intends to register Euronext Growth as an SME Growth Market as provided for in MIFID II. II.

Although the first half of the year remained relatively quiet, some remarkable listing stories emerged, mostly from growing small and medium -sized companies.

Smart manufacturing company Arcure listed on the Euronext Growth market in February. Arcure develops solutions that combine 3D vision sensors with AI algorithms to enhance the autonomy and safety of industrial machinery. The company raised €7.9 million at IPO and achieved a reached €35 million market capitalisation, becoming the first listing of the year on the Euronext markets.

Belgium-based medtech company Sequana Medical made its initial public offering on Euronext Brussels, raising €27.7 million to finance its growth strategy. The company became the 41st medtech to list on Euronext markets, a sector that represents a significant peer group for investors trading on Euronext.

Watch the video of Sequana Medical’s listing

Listings continue to expand beyond Euronext countries

Beyond Euronext borders, entrepreneurs across Europe are also considering the Euronext platform to list their company. We welcomed three Italian companies to our Paris market this semester:

Italy Innovazioni, a growing engineering and design company dedicated to the innovative design of household electrical outlets,

Società Editoriale Il Fatto, an independent Italian multimedia provider and publisher,

and EdiliziAcrobatica, the leading Italian company for safety rope access within the building industry. The Euronext Paris building façade was decorated to welcome the enthusiastic EdiliziAcrobatica team and management, who made the trip from Genova to ring the bell at the listing ceremony. Grazie a tutto il team!

Take a look at EdiliziAcrobatica’s listing ceremony

On 7 June, Iceland-based company Marel, a global leader in technology-backed food processing, listed on Euronext Amsterdam with a public offering comprising 100 million shares. To further strengthen its strong growth, the company was looking for a platform offering a deep and global investor pool. Marel picked Euronext Amsterdam out of a select group of major international exchanges to strengthen its capital structure and provide a global currency for acquisitions.
Watch the video to hear Marel's CEO explain the company's story and why he chose Euronext.

Ireland paves the way to international investors for new life sciences listing

Uniphar, a diversified healthcare services group headquartered in Dublin, listed on Euronext Growth mid-July, for total proceeds of €150 million. The listing is to allow the company attract new investors and capital from across Europe.

The stock exchange is not just about going public; on the secondary markets, activity has been driven by the need for financing from large corporates as investors have switched to assets perceived as safer. Some companies efficiently carried out follow-on deals to raise capital on Euronext markets.  Here are a few of the highlights:

Mergers & Acquisitions deals brought out impressive stories to the markets

M&A deals from Essilor (Luxottica), Covivio (Eurosic) and Takeaway.com were the largest financing deals this semester, raising €2.1 billion in total.

Private healthcare group Ramsay Générale de Santé announced a takeover deal on competitor Capio, which holds the leading position in Sweden and is a major player in Norway and Denmark. The Group made a €567 million public offer to finance the acquisition.

Online food delivery marketplace Takeaway.com listed on Euronext Amsterdam in September 2016, with a market capitalisation of around €1 billion. Already ranked as a Tech Unicorn at the time, it has kept growing (valuation estimated at some €5 billion today), and earlier this year acquired the German business of DeliveryHero for a total consideration of €930 million. The transaction was successfully completed in April 2019 thanks to a €430 million capital increase and a €250 million bond listed on Euronext.

Takeaway.com’s gong ceremony in 2016

Biocartis and Nanobiotix: life sciences on the move

Among the latest notable life sciences deals, two biotech companies have been active in the secondary market this semester. Biocartis, a Belgian biotech, successfully raised €55.50 million in a private placement.

French late-stage clinical company Nanobiotix made a private placement in April 2019 for €29.52 million to finance its next developments. The company, which listed in 2012, has made 6 offerings on the stock exchange since listing for a total consideration of €141.7 million.

Energy and services drive Dublin offerings

International oil and gas company Falcon Oil & Gas made a successful placement of new common shares on Euronext Growth Dublin for €8.08 million to pursue its business developments. Also in Dublin, First Derivatives, a leading provider of products and consulting services, issued new shares for €4.31 million.

The real estate market in the spotlight

The real estate sector is gaining traction on Euronext markets. This semester, we saw Foncière INEA closing its largest capital increase for €96 million, significantly broadening its shareholder base. Euronext also saw three SIGIs (Portuguese Real Estate Investment Trusts, or REITs) as well as one SOCIMI (Spanish REIT) listed on our markets.

Among the largest transactions, Belgian real estate company Aedifica launched a successful 418 million capital increase. The company made the offer to refinance the recent acquisition of a UK healthcare real estate portfolio, support its development pipeline and increase equity to continue its growth strategy. Montea, also a Belgian real estate company, successfully completed a public offering of €176.56 million.   

This closes the chapter of the most interesting listing stories from H1 2019. The next ‘Inside Euronext Markets’ newsletter will bring you the next chapter of news on companies and their stories as they finance their business and future development through Euronext. Subscribe here.

The first half of 2019 presented a conundrum for anyone observing European stock market listings. Stock market indices rose, but despite this, listing activity was low.

 

 

The EURO STOXX 50 index of blue-chip Eurozone stocks, to take an example, finished June up 15.73% since the beginning of the year, buoyed by the European Central Bank’s decision to step away from tighter monetary policy.

European exchanges saw few IPOs in the first six months of the year. However, there was still strong investor interest in some companies that managed to make their way to the capital markets, among them Marel, a global leader in technology-backed food processing, and Fastned, the electric vehicle charging company. Many are looking closely at the forthcoming operation of Naspers, one of the largest Tech listings expected this year on Euronext Amsterdam. IPO activity was also generally muted outside Europe, although the US saw a few very large deals, including ride-hailing company Uber’s $8.1 billion (€9.2 billion) capital raise in May and its competitor Lyft’s $2.6bn capital raise (€2.3 billion), or life sciences company Avantor for $3.3bn (€2.9 billion).

Companies are watching and waiting

With the exception of these IPOs, companies are clearly watching and waiting before listing, despite good stock market performance. To take an analogy from nature, they can be likened to a heron standing totally immobile in a pool. The bird appears to be doing nothing at all, but is in fact monitoring activity beneath the surface intently, ready to strike at the right opportunity to catch fish.

A number of companies across Europe have changed plans, by suspending flotation ambitions this year. These include Gefco, the French logistics company, which in January postponed its IPO on Euronext until market conditions improve, and Abacus Medicine, a Danish drug company, which in May announced that it had put its listing plans on ice, citing an “unfavourable market environment”. Many companies would rather sit out the period of uncertainty, to avoid the risk of either a cancellation or a disappointing launch price, as happened with Uber’s high-profile listing across the Atlantic.

There has been a lot to be uncertain about so far this year. In April the International Monetary Fund cut its 2019 economic growth forecast for developed economies, with Eurozone growth projected at only 1.3%. The outlook for Brexit, which could harm growth throughout Europe, remains opaque. Outside Europe, the future picture for trade between the US and China, which could cause ructions throughout the global economy, is also murky. Reflecting these uncertainties, the index measuring expected volatility for the EURO STOXX 50 rose in May to its highest level since mid-January.

However, European listings could pick up during the second half of the year, provided the clouds dissipate and the outlook becomes clearer for Brexit, trade tensions and European economies. In other words, the listings lull of the first half of this year might have allowed for the build-up of a backlog of deals for the rest of the year. Like the heron, we must wait and watch.