Euronext, the European stock exchange, is launching its own version of the London Stock Exchange’s successful Alternative Investment Market, which celebrates its tenth anniversary this summer.
AIM has enjoyed considerable success in the last calendar year accounting for around 60% of IPOs across Europe. Alternext, which is scheduled to launch in 2005, also hopes to attract mid-sized companies from across the Eurozone and will act as a stepping-stone between venture-backed companies and the listed market. The launch of Alternext has been encouraged by the introduction of the European Financial Services Directive, which will make it tougher for companies to list on the main stock exchanges. Like AIM, its regulatory status will not be subject to the European Financial Services Directive. The new exchange will be structured to offer protection for investors and will also be committed to providing a high standard of financial transparency.
Whether the new exchange will match the success of AIM remains to be seen. Gary Houghton, corporate finance partner at Baker Tilly, is sceptical: “The UK already has a strong offering and it’s hard to see how this new exchange will come in and compete. AIM is very strong and is a proven means for growing companies accessing capital. You’ve also got Ofex for earlier stage companies.” One of the main benefits that drive AIM are the tax benefits. “EIS and VCT relief give investors a tax break on their returns and following the April budget the tax breaks are stronger than ever. Unless Alternext can offer something similar, I don’t see how it can compete,” he says.
Many investors will wait and see how successful the market becomes. Until then AIM will continue to be the market of choice, but this may also depend on how nationalistic the other countries are.
Euronext has also announced a restructuring of its format. From January 2005 a single list called Eurolist by Euronext will replace the three regulated markets now operated by Euronext Paris: the Premier Marché, Second Marché and Nouveau Marché. This structure will then be implemented in Amsterdam, Brussels and Lisbon and adapted to suit the local needs of each market.