Launch of the Euronext Tech Leaders at Scale-Up Europe on 8 February 2022: building an inter-connected financial ecosystem to finance high-growth Tech champions
Roundtable with Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext, on “Enhancing the financing of European Tech ecosystems in order to create world champions”
On 8 February 2022, during the “Scale-up Europe” initiative hosted by the French Presidency of the EU, the French Minister of Finance, Bruno Le Maire, together with the governments of Germany, Spain, Italy and Greece, announced that 10 European countries are aiming to launch a fund of €10 billion to finance scale-ups. It will address the crucial issue of funding scale-ups’ fast growth.
Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext, took part in a panel on “Enhancing the financing of European Tech ecosystems in order to create world champions”, notably next to Pieter Van Der Does, CEO of Adyen, Stéphanie Yon-Courtin, Member of the European Parliament, Zoé Fabian, Partner at Eurazeo, Alain Godard, Chief Executive, EIF, and moderated by Charlie Perreau from les Echos.
In this context, Stéphane Boujnah announced that Euronext will be launching Euronext Tech Leaders, a segment dedicated to Tech companies, with a full suite of pre-IPO and post-IPO services that will be deployed from the 7 markets where we operate in Europe (Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo, Paris). The new Euronext Tech Leaders segment is dedicated to supporting Tech companies in their growth and financing journey, in response to the increasing need for solutions to finance the fast growth of next generation tech giants. Approximately 50% of the companies listed on Euronext markets in 2021 were Tech companies raising €10.92 billion.
Looking back at the foundations of this project, Stéphane Boujnah notably highlighted the challenges that lay ahead to further build an inter-connected European financial ecosystem that will allow to transform science and technology into growth and job creation in Europe, as a matter of European sovereignty. Capital markets allow companies to finance investment, innovation, growth, and provide an infrastructure for Tech companies to access equity and funds. Euronext is already the leading listing venue for tech financing in Europe. Out of the 2000 companies listed on Euronext, 763 are Tech companies, representing €1.8 trillion of market capitalisation as of 31 December 2021.
There is a need to further inter-connect the European ecosystem of investors, equity research analysts and unicorns. To shape the appropriate “triangle” in order to allow Tech growth funding, we need to work on further connecting companies with investors, when their natural next step is to go public and list on our markets in order to finance their growth, but also to complete this “triangle” by building a critical mass of equity research, in order to deliver strong transparent information to investors. Private equity and public markets are strongly committed to connecting issuers with investors, especially at Euronext, through initiatives such as Euronext Tech Leaders and its complementary pan-European pre-IPO educational programme, TechShare.
This move towards building an efficient Tech growth funding system is being significantly accelerated by European stakeholders with the previously mentioned initiatives, led by the EU and by Euronext. It is also facilitated by the depth of the European liquidity pool, Euronext’s being the largest in Europe with a liquidity platform across 7 exchanges in Europe. With an aggregate market capitalisation of €6.9 trillion from companies listed across Euronext markets , today, 25% of the equity traded in Europe is traded on Euronext markets. Euronext’s trading platform has an average of €12 billion volumes traded daily. The depth of liquidity is the most fundamental differentiating factor for any public market. And due to the depth of its market, Euronext is an accelerator of growth at European scale by increasing its support in preparing companies getting ready to go public on capital markets.
The new Euronext Tech Leaders segment is complementary to TechShare. By placing these high-growth Tech companies in a single segment, companies will have be more visible to global investors. In addition to this, grouping companies in a segment like Tech Leaders can mean more liquidity and better pricing when it comes to investment.
On this occasion, Stéphane Boujnah also highlighted that further to the Mifid II reforms, the complete economics of equity research have been significantly depleted, specifically for Small Caps and medium-size brokers. The industry is currently working on repairing the economics of equity research. There are two issues that need to be solved in Europe in that regard: the scarcity of equity analysts and finding an equity model for equity research. Euronext is confident in that regard as the EU and the Commission are putting forward proposals related to this.
Once this has been achieved, it is then time to reinforce interdependency between investors, equity research analysts and unicorns. The transition to an efficient European growth funding model for Tech major players requires further building of an adequate inter-connected financial ecosystem. The described “triangle” will be the result of the ecosystem Euronext has been working to deliver since its transformative IPO in 2015. The challenge in finding financing sources for high-growth Tech champions is speed in the EU capital markets union process, but also scale, and we at Euronext, along with our partners, have put forward a major contribution with the launch of Euronext Tech Leaders. If Europe wants to build its strategic autonomy, as it is the aim of the French Presidency of the Council of the EU over the next few months, then capital markets is the place to build strategic autonomy to focus our influence.
Euronext is the leading listing venue in Europe, with 212 listings recorded in 2021. More than 50% of the listed companies in 2021 are Tech companies, of which for example: Allfunds, Exclusive Networks, Believe, Aramis, OVHCloud, Aker Horizons. 288 Tech companies have listed on Euronext since 2017, €184 billion have been raised in shares since 2017, more than 2,250 institutional investors have been identified in the Tech sector, and €85 million have been raised, on average, at IPO, since 2017. Among the 212 listings recorded in 2021, 109 were Tech companies. And among the close to 2000 issuers, 763 are Tech companies, corresponding to an aggregate market capitalisation of the Tech sector of €1.8 trillion as of 31 December 2021.