Euronext's plan to boost technology IPOs in Europe

Euronext, the main capital markets operator at European level, wants to revitalize the battered technology IPO (Public Offering) market in Europe. The value of IPOs by venture capital-backed technology groups in the region has plummeted from the 2021 peak of $94 billion (€86.7 billion) to just $15 billion last year, according to data from the latest State report. of European Tech prepared by the Atomico investment fund.

To break this trend, the company, which manages the Amsterdam, Paris, Milan and Dublin stock exchanges, among others, launched Euronext Tech Leaders almost two years ago, a new stock index aimed at giving visibility to European technology companies with greater potential and attract investors. "The objective is to give more visibility and facilitate access to these European companies for North American or Asian investors. With this index they can quickly identify the leading technology companies in Europe," explains Susana de Antonio, head of Euronext in Spain.

Currently, 119 companies are part of the Euronext Tech Leaders, with a combined market value of more than 900,000 million euros, among which are some of the largest European technology groups: the payment methods company Adyen; the manufacturer of ASML chip production machines; the telecommunications multinational Nokia or the video game developer Ubisoft. Among the hundred companies there is only one Spanish, the fintech Allfund, which appeared in 2021 at Euronext in Amsterdam.

In total, 22 new companies have joined since the launch of this index. The latest is the French Pluxxe (a spin off of Sodexo), dedicated to business profits, which made the jump to the stock market on January 30. To access this new index it is necessary to be listed, have a market value of more than 300 million euros and a high growth rate, between 5% and 20% in the last three years depending on turnover.

Euronext also offers companies access to a network of investors specialized in technology, as well as networking events and advice for those companies that have not yet made the leap to the stock market but are considering doing so.

Euronext is aware that, by itself, this initiative will not push companies to list. "This is not going to make them decide to do an IPO or not to do it," De Antonio acknowledges. "However, for those technology companies that hesitate between several options, it can be an incentive," he adds.

Nor will it prevent large groups, as happened last year with the British chip designer Arm, from going public in the United States instead of in Europe. Although he defends that except for "very large companies", the reality is that it is not so beneficial to debut on the other side of the Atlantic. "The investor does not perceive you in the same way as a North American company and there is usually greater volatility in the valuation. Maybe on the first day you have a higher rise, but in the long run the price is more stable in the European markets," says De Antonio.

As far as Spain is concerned, the IPO drought makes it difficult to remember the last IPO of a high-profile technology company in our country. The head of Euronext in Spain attributes this to the lack of references. "In Spain there are very few IPOs in general. If you don't have precedents or the experience of comparable companies, fewer companies will consider it," she emphasizes. And she adds: "In countries like France or Italy we see many more technology IPOs. If there are comparable companies there are investors. If there is little activity it is difficult for someone to launch."

And there is no shortage of candidates. The list of potential unicorns – start-ups with valuations of more than $1 billion – is long. From the Idealista real estate portal to the Cabify transportation app, through the Jobandtalent employment platform or the online travel agency for companies Travelperk, among others.