uncertainty in the Eurozone is leading European companies to
adopt US initial public offering (IPO) structures.
the European IPO model, companies must make their prospectus
available for at least six trading days. But the US IPO model
allows for smaller offerings and a shorter marketing period,
both factors that appeal to companies in times of macroeconomic
companies opt for a smaller IPO with a shorter marketing
period, the macro market volatility in that period tends to be
more predictable and therefore the chance of getting it away is
increased, said Derk Lemstra, head of Stibbes
equity capital markets practice in Amsterdam.
also noted an increasing desire among European issuers to use
anchor investors. This gives companies a guarantee that a
couple of investors will step in, before they go public,
Horton of Simmons & Simmons in London said fragile markets
had led to pilot fishing taking place earlier too, enabling
firms to establish whether the IPO will be successful before
moving into the full execution phase.
companies are also showing an increasing preference to list in
& Cases London-based US securities partner, Doron
Loewinger, said in the past eight months a significantly larger
number of European and Russian companies, largely from the
technology industry, had been approaching the firm wanting to
do an IPO in New York.
in London need to have at least 25% of their shares in the free
float; but there is no percentage requirement under Nasdaq.
Firms just need at least 1.1 million shares and a market value
of $18 million (£11 million).
previous years specialist issuers would routinely choose the US
over Europe. This preference fell away a couple of years ago
because of increased regulation in the US.
firms are much more prepared for all the investigations and
procedures needed to assist companies in their Sarbanes Oxley
requirements, said Loewinger. The whole process is
much shorter and less expensive than it was ten years
shift in preference has been further bolstered by a more
advanced recovery in the US capital markets post global
financial crisis than their European counterparts.
Loewinger warned firms looking to tap the US markets needed to
be aware of liability issues.
some sense there is more risk, he said. The liability
under securities laws in the US is stricter.
listing in the US need to comply with more defined periodical
filing requirements, he said. And for local deals, a higher
level of diligence is required in the US. Additionally, while
European corporate governance rules typically take the form of
comply or explain, allowing for some deviation from
the regime, the US framework is significantly less