Risks and red tape hold back IPOs – Central Valley Business Journal

12/13/2021 at 07:31 CET
Araceli Munoz
A few years ago, go out to bag it was the dream goal of many companies, who saw in the jump to the park a strategy to put the finishing touch to a growth story and a way to obtain media recognition. However, in recent years the IPOs they have stalled in Spain, that So far in 2021 it has only registered three takeoffs Stock markets: Línea Directa, Acciona Energía and Ecoener.
The president of the CNMV, the Spanish stock market regulator, Rodrigo Buenaventura, expected in January that at least six national companies would jump on the floor throughout this year, but finally the figure has been halved. A data better than the last two exercises (In 2019 none came out and in 2020 only Soltec), but that breaks the hope of the CNMV to resume the rhythm of 2015, when seven companies began to be listed in the country.
This stock market drought is motivated, according to the experts consulted by El Periódico de España, by the bureaucracy involved IPOs, which lengthen the process for months causing the market situation expected for the IPO to end up completely transforming. To that is also added the risks involved, because “if suddenly a company that carries out an activity similar to yours on the other side of the world goes down on the stock market, your company’s jump to the stock market will probably also end in red & rdquor ;, they explain from a common investment bank in this type of processes.
The long time required by these processes makes IPOs difficult, because when they are prepared, the scenario has been able to change drastically
One of the best examples in this sense has come from the hand of renewable energies, as the year began with an expected green market premieres boom. Names such as Capital Energy, OPDEnergy or Repsol’s renewables subsidiary sounded in the pool of new additions, but the market situation and the result of Ecoener’s stock market take-off – which has dropped 27.5% since it was launched in May – stopped the aspirations of some of these companies, which have postponed their IPO until they have greater visibility or become larger. Faced with these cases, the one of Acciona Energía, which has become the pretty girl of the stock market this year with a revaluation of its shares of 7.25% since it jumped to the stock on July 1.
“For these types of companies, which require a lot of funding To start their projects, the IPO is very interesting, but it is true that they must have a certain size or a success story behind to justify and attract the interest of investors & rdquor ;, they add from the same entity. “However, a placement on the parquet involves other important issues, relative to a greater transparency already some higher demands in the corporate governance of a society that many companies are not so clear about. To this must be added another factor: being able to transmit to the market the potential of a company so that it is reflected in its stock market valuation & rdquor ;, they continue.
“You have to be able to transmit to the market the growth potential that a company has,” they explain from an investment bank
In this context, many venture capital funds have seen a great opportunity finding listed companies whose value was not recognized by the market, which has encouraged an investment movement to privatize companies (public-to-private). Solarpack, Másmóvil, Parques Reunidos, Telepizza or Natra are some of the best examples of how venture capital has begun to ‘eat’ the cake of the Spanish stock market. For them, it is also an important advantage, since they achieve buy companies at a cheaper price that if they participate in a competitive auction against other heavyweights in the sector.
In fact, the boom that venture capital is experiencing in Spain is another reason why companies do not go public as much as they did years ago. The enormous liquidity that these investors amass guarantees the founders / owners of a company that they will make money in a shorter period of time than if they started trading and, in general, obtaining higher returns for the tough competition that is in the market.
Venture capital is a good alternative for companies, as they allow founders to ‘make money’ in a shorter period of time
It’s more, this trend is not unique to SpainRather, it comes from the great cradle of venture capital: the United States. There is also a phenomenon of reduction in the number of listed companies taking place: from approximately 8,000 companies in 1996 to some 3,530 companies in fiscal 2020, according to data from Goldman Sachs. Between 1990 and 2000, the US stock market registered a significant number of stock market premieres, also greatly boosted by the dot-com bubble.
However, North American companies have also decided to bet on other ways to seek financing instead of financial markets. It is striking, in any case, that bank financing there barely represents 20% compared to 80% in Spain. A break with the traditional banking dependency that will end up reaching the country, at a time when companies have more and more options to grow: not everything is the stock market or financial institutions.
However, experts also highlight that not all companies are eligible to go public, despite being attractive to investors. “There are many more reasons why large family or private groups do not want to bet on this strategy: from corporate culture issues to having a good shareholder liquidity situation and they do not want strangers to have access to their accounts and their investment strategy. business & rdquor;, they argue.
Faced with the stock market drought, in recent years the phenomenon of ‘SPACs’ has developed in the US: companies with “a special purpose of purchase & rdquor ;. They are companies that, without having any activity or operation, are specifically created to raise capital for the purpose of acquiring other companies or participating in a merger. A phenomenon that could drive IPOs in the country and that the Economy is trying to regulate with the modification of the old Securities Market Law, which dates back to the 1980s.
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Copyright © 2017 JNews.


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