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Spain plans to give companies significantly more flexibility over when they can launch their initial public offerings, in a bid to prevent listings being scuppered at the last minute by political shocks, wars or market sell-offs.
Companies in Spain currently have five days for their shares to start trading once they have completed their listing preparations and received regulatory approval. However, the market regulator and the BME, which owns Spain’s stock exchanges, plans to extend that period to 18 months in order to let them choose the “best” moment.
The move follows a spate of eleventh-hour IPO cancellations that have tarnished the market’s reputation. It also comes as Europe looks at ways to make its markets more attractive for flotations, after a number of companies opted to move their listings to or launch their IPOs in New York.
Presenting the plan, Carlos San Basilio, chair of the CNMV market regulator, said that in the past five years half of the companies that had approached the regulator about going public had abandoned their plans at some point.
The decision to change the rules, he said, was “to put an end to this and offer an alternative”.
Europastry, which makes frozen croissants, cancelled its flotation twice last year, citing market turbulence in June linked to a snap French parliamentary election and then “the international geopolitical situation” in October.
Tendam, a fashion retailer, postponed its IPO twice in the same two months, citing uncertainty over the outcome of the US presidential election on the second occasion.
Both companies remain unlisted but recent private deals have changed their ownership: Abu Dhabi’s Multiply Group bought 68 per cent of Tendam and Europastry sold a 20 per cent stake to CriteriaCaixa, part of a bank foundation.
“There is an urgent need for measures to reverse, or at least halt, the loss of influence and competitiveness of the economies of the old continent,” said Juan Flames, chief executive of BME, referring to Europe as a whole.
To avoid repeated cancellations, the new process — dubbed BME Easy Access — would enable companies to choose their timing “at short notice” within the 18-month period, the CNMV said.
“In this way, the IPO process would be separated from the macroeconomic and liquidity circumstances of the markets, which favours companies’ planning and avoids the risk that circumstances beyond the company’s control may frustrate the IPO,” the regulator said.
The new approach, which the regulator wants to finalise before the summer, would work by loosening requirements on the minimum free float that listed companies must have.
The listing process will be officially available to companies with a valuation of at least €500m, but the CNMV said it would consider applications from smaller businesses.
The regulator added that it was consistent with measures envisaged in the bloc’s Listing Act to revitalise public markets.
