Euronext launches small cap market in Brussels; Amsterdam gets green light

Source: Euronext

Euronext announces the effective launch of a new non-regulated market, Alternext, in Brussels on the 20th of June, with the admission of the company Evadix1.

Alternext was successfully launched in Paris a year ago and now counts 37 companies with a total market capitalization of almost 2 billion euros.

Euronext has created this market as part of its long-standing commitment to provide small and mid-caps with appropriate solutions to their financing needs and further growth in a context of more stringent European regulatory environment on regulated markets.

Alternext is an exchange-regulated market with a lighter regulatory framework, offering small and mid-sized companies from any sector a simplified access to the capital markets, while ensuring investor protection and transparency and promoting liquidity.

Olivier Lefebvre, member of the Managing Board and Executive Vice-President of Euronext, said: “The launch of Alternext will complete the range of markets offered by Euronext Brussels.

It has the ambition to become the reference market for small and medium sized companies. It will meet the needs of companies wanting to raise capital for their further development, while offering attractive opportunities for private and institutional investors to participate in financing growth.”

1. Simplified access for companies

Any company may request a listing on Alternext, provided it has two years of existence, it intends to raise at least 2.5 m€ and it is accompanied by a Listing Sponsor. It may choose to use its domestic accounting standards.

There are two ways to be listed and traded on Alternext:

A public offering simultaneous to the listing, through the selling of existing shares and/or new shares;
A simple listing without any public offer.
Listing requirements:
A prospectus reviewed by the regulator in the event of a public offer, or an offering circular under the responsibility of the issuer and the Listing Sponsor in the event of a private placement are compulsory. In terms of minimum float, 2.5 million € are required for a public offer, whereas for a private placement, this limit is set at 5 million € within the two years preceding the listing.

2. Investor protection and transparency

However, in order to meet investor expectations in terms of transparency, companies are required to communicate key information to the market, i.e.: any information that may affect the share price, unaudited semi-annual reports, audited annual accounts, crossing of shareholding thresholds (25/50/75/95%), declaration of management transactions. The rules regarding insider trading and price manipulation, as well as take-over bid and squeeze-out regulations also apply. The CBFA is charged with the supervision of the prospectus, of the market and of the information provided by the issuers.

Alternext is expected to attract professional as well as individual investors.

3. The Listing Sponsor: an essential player for issuers and investors

A Listing Sponsor, a new and adapted advisory status, is ainancial specialist recognized by Euronext who acts as a coordinator between the issuer and the exchange at all times.

Any company seeking a listing on Alternext must have a Listing Sponsor, both in the run-up to listing and throughout its life as a listed company. The Listing Sponsor has a key role to play in ensuring that an issuer fulfills its transparency requirements.

To date, listing sponsors recognized by Euronext Brussels are: Bank Degroof, Leleux and ING. This list will evolve with the further development of Alternext and with the number of listed companies.

4. A market model designed to enhance liquidity

With Alternext, Euronext has designed a specific market model aimed at maximizing possibilities for investors to execute transactions and thereby enhance liquidity. During the day, shares can be traded through the central orderbook (either continuously or by call auction) and via market makers

The choice of trading method depends on the investor.

Trading in the central orderbook:
The most liquid shares (more than 2,500 trades annually), are quoted and traded continuously between 9 am and 5:30 pm.
All other shares are traded through a daily auction at 3:30 pm.
Market makers can trade continuously throughout the day
1 The EVADIX Group is one of the leading players in the fields of technological integration and e-business, printing, direct marketing production, and advanced logistics.

Separately, Euronext is happy to announce that the Dutch Ministry of Finance has granted a licence for the launch of Alternext Amsterdam, an exchange-regulated market aimed at small and medium-sized companies. All legal and technical matters have now been dealt with, enabling Alternext Amsterdam to welcome its first listings. A number of companies have already shown an interest in a listing on Alternext, and the first listing is expected in the second half of 2006.

Alternext is an exchange regulated-market, offering small and mid-sized companies from any sector a simplified access to the capital markets, while ensuring financial transparency and investor protection. Euronext has created this market to provide small and mid-caps with appropriate solutions to their financing needs and further growth in a context of a more stringent European regulatory environment on regulated markets.

The launch of Alternext Amsterdam is broadly supported by the Dutch financial sector. The major Dutch investment banks (ABN Amro Rothschild, Fortis Bank, ING Bank, Kempen & Co, Rabobank and SNS Securities) as well as Amsterdams Effecten Kantoor and First Dutch Capital agreed to advise and support companies seeking a listing on Alternext and therefore will act as a listing sponsor.

This Euronext initiative is also supported by various parties, including the Dutch Ministry of Economic Affairs, MKB Nederland (Dutch association for small and medium-sized companies), the Confederation of Netherlands Industry and Employers (VNO-NCW), and the Dutch Investors’ Association (VEB).

Euronext launched Alternext in Paris a year ago. The highly successful new market, which has already attracted 37listings with a combined market capitalisation of nearly €2 billion.

Joost van der Does de Willebois, member of the Managing Board and CFO of Euronext said: "Our core activity is to bring together supply and demand for capital in a transparent, objective way. I am very pleased that we can now extend this service to small and medium-sized companies in an efficient manner that appeals to them."

Loek Hermans, chairman of MKB Nederland, said, "The new Alternext market will enhance the position of small and medium-sized companies. Fast growing entrepreneurs will be able to raise funds more quickly and easily through Alternext, and transfers to third parties will also be easier. MKB Nederland therefore expects that there will be a high demand for listings from the business community."

Peter Paul de Vries, director of the Dutch Investors’ Association, said, "Euronext’s plan to set up an Alternext market in Amsterdam as well as in Paris and Brussels could provide a boost for Amsterdam. However, in order to protect investors, Euronext Amsterdam needs to make sure it pays close attention to the quality of the companies it lists, just as Euronext Paris does."

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