At the Euronext annual conference on 19 March, Marie-Anne Barbat-Layani, Chairwoman of the Autorité des marchés financiers (AMF), announced the lifting of the requirement for companies to reserve a proportion of their shares for retail investors during initial public offerings (see AFP and Les Echos). This requirement, which was specific to France, aimed to reserve a minimum of 10% of shares placed on the market for retail investors (see article 315-6 of the AMF’s General Regulations).
The abolition of this requirement will enable issuers to carry out IPOs very quickly, without a public offering. The aim is to make the Paris stock market more competitive.
Does this mean the end of retail IPOs? Certainly not!
This measure will apply to transactions that do not need to be subscribed to by retail investors: these may be large transactions of several hundred million euros, for which subscriptions from professional investors number in the hundreds. They can also be more technical, confidential deals, where the objective is neither liquidity nor visibility.
But the majority of IPOs, whether in Paris or elsewhere, are for SMEs: they come to the stock market not only for financing, but also to raise their profile. Without individual investors, issuers will be of much less interest to the media. What’s more, SMEs need a strong retail base to ensure that their shares are liquid once they are listed, because the few dozen professional investors who subscribe to their capital at the time of the IPO will not be able to ensure sufficient liquidity on their own.
It is therefore in the interests of SMEs to continue to reserve a proportion of their IPO shares for retail investors. But this is also the case for many large companies: it is hard to imagine La Française des Jeux not going public. One of the objectives of this IPO in 2019 was to make it a great popular success, and this was largely achieved.
In conclusion, this measure can only be beneficial for the stock market and all its stakeholders (including financial communications agencies -such as Calyptus- which work to make IPOs a great retail success). It can only bring more deals to the Paris market, creating a virtuous circle in which the success of ‘private’ deals leads to new public deals in their wake. Collectively, we have everything to gain.
Feel interested? Please contact Mathieu Calleux, MD of Calyptus
