The associations agree that European public equity markets must provide better opportunities for companies to finance themselves and that the economic recovery and long-term sustainable development of Europe depends on realising the full potential of public capital markets to finance companies in Europe.
Especially in the context of the expected reduction in bank credit, the associations believe that there is a need for concerted action to help position the capital markets as a key source of economic growth in Europe. The Task Force will aim to present its first findings to the new Commission and Parliament by November 2014. It will contribute to the legislative planning for long-term investment, a debate begun by last year’s Commission Green Paper. The Task Force will also look at the continued funding of companies via capital markets in a broad sense, i.e. not only at the initial IPO stage but also at the other financial instruments available to companies (such as public debt) that can meet their financing needs.
The associations will provide intellectual support to the Task Force, which will be composed of corporate representatives and independent experts from the different parts of the ecosystem involved in listing companies. The associations will seek to ensure a balance of both expertise and geographic location in the Task Force. An IPO Roundtable will be organised in Zürich on June 18, 2014 at which preliminary findings of the Task Force will be discussed publicly.
Finally, the associations will seek to learn from, other praiseworthy industry initiatives, such as the IPO Task Force and the Equity Capital Formation Task Force in the US.
Susannah Haan, Secretary General of EuropeanIssuers, said: “Europe’s overall competitiveness depends on the strength of its innovative small and mid‐cap companies. European companies understand that the role of bank finance in the European economy is changing, and want to be reassured that the capital markets will be able to help them in the future. For this to happen, they need a support system in place to help them to find the information they need, to grow and develop their businesses. We hope that the Task Force will be able to learn from best practice and to make recommendations for regulatory and non-regulatory change, as appropriate.”
Dörte Höppner, EVCA Chief Executive, said: “The Task Force will make a valuable contribution to the debate over long-term investment, which is of vital importance to Europe’s future prosperity. European private equity plays a significant role in providing long-term finance to Europe’s businesses and a vibrant IPO market will spur more of this real economy investment but it is up to policymakers to create the correct framework to encourage both long-term investment and IPOs.”
Judith Hardt, Director General of FESE, said: “IPOs are critical to economic growth. When dynamic companies access public capital markets, they can grow independently – and thereby create high quality jobs, spread wealth, boost local innovation and intellectual property, and improve the safety and diversification of investment. Exchanges play a key role as established venues of channelling financing for growth. Europe’s exchanges are providing companies with a full range of choices and services to help them access markets and are dedicated to making their markets continuously deeper and more relevant for all companies and investors.”
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AMF launches an IPO working group
With its strategic plan seeks of keeping abreast with changes in the financing of economic activity and involving stakeholders in making Paris a dynamic financial marketplace in mind, a working group has been set up by AMF to examine the prevailing regulatory environment in France.
Regular dialogue between the AMF and intermediaries on the practical issues raised by recent initial public offerings (IPOs) has drawn attention to four main discussion areas, which have been adopted by the AMF Board:
how IPOs are structured;
the rules applicable to price range;
the criteria used to assess the price range;
the way the IPO timetable is linked to the production of investment research and the release of the base document.
The work will be carried out mindful of the financial industry’s concerns about the scheduling constraints involved in an IPO timetable. The working group is chaired by Monique Cohen and Jean Pierre Hellebuyck, both members of the AMF Board. Its members are representative of banks, advisers, lawyers, institutional investors, IPO decision-makers, company and individual investors’ representatives. The findings and recommendations will be put out to public consultation in autumn 2014.
Since the 2000s the regulatory framework for IPOs in France has been amended regularly in response to various cycles. The following developments are particularly noteworthy:
Decision 2000-01 of the Conseil des Marchés Financiers on the enforcement of conduct of business rules when a company makes an initial public offering;
The possibility of splitting the prospectus into a base document and a securities note. This option was introduced in late 2002 when the procedure for examining financial disclosures and issuing regulatory approval was revised to provide the public with reliable, detailed information as early as possibly ahead of an IPO.
Relaxing the procedures for launching an IPO in a highly volatility market (see AMF position DOC-2009-12). Under these circumstances, the indicative price range can be widened by plus or minus 10%, and a lower offer price can be set without the need for additional approval, on condition there is no material impact on the information in the prospectus.
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