Junior markets head to head in battle for IPOs

The choice of where to launch an IPO has become far more complicated for the
FDs of high growth companies after the creation of junior exchanges by Deutsche
Börse and Euronext to rival the London Stock Exchange’s AIM market.

Deutsche Börse launched its Entry Standard junior market in October last
year, shortly after Euronext had established Alternext in France, Holland and
Belgium.

The two continental exchanges launched their junior arms in reaction to the
remarkable success of AIM, which last year alone attracted 519 new companies,
120 of them from abroad, to its trading platform, raising £6.4bn of new money in
the process.

The creation of the two AIM rivals has presented a range of new choices for
FDs eyeing a listing on a flexible, lightly-regulated exchange.

At an ICAEW corporate finance faculty conference held last week
representatives from the three stock exchanges gave heated arguments for their
respected cases.

Martin Graham, the London Stock Exchange’s head of AIM, said FDs would be
‘insane’ to list their companies anywhere other than on AIM.

‘If a company wants to list it has the choice of a small local start-up or
the dominant market that has the momentum and critical mass to drive it
onwards,’ Graham said.

Erik Wenngren, director of international listings at Euronext, however, said
that although Alternext was still in its infancy it had already attracted
institutional interest and was on a strong growth path. According to Wenngren
less than 1% of the one million SMEs in Europe were still listed.

‘We all have to walk before we run, but we are certainly on the same growth
path as AIM. We have already attracted top institutional interest, which was not
the case for AIM when it launched,’ Wenngren said.

Rainer Riess, managing director of Deutsche Börse, said companies should also
consider the location of their business activities when pursuing a flotation.

‘Companies that do most of their business in the eurozone would benefit from
the exposure of a listing in mainland Europe instead of London,’ Riess said.

Riess conceded, however, that the depth and quality of advisers in the UK
placed AIM at an advantage to its European rivals.

‘There are experienced advisers all over the UK, a depth that does not exist
in the continent. This provides a means of covering capital demand and finding
demand,’ Riess said.

COMPANY REPORTS

FTSE 100

Investors and analysts willbe keeping a close eye on British Airways
tomorrowwhen the group releases its final results. The airline has previously
revealed that it plans to clear its £1bn pension deficit, and the market will be
waiting for further news on the company’s plans to eliminate the deficit.

High Street pharmacy chain Boots announces final results today and is
expected to provide an update on its proposed merger with Alliance UniChem. The
position of Boots CFO Jim Smart will be one area of interest. A successful
merger will see Smart replaced by Alliance UniChem group finance director George
Fairweather.

FTSE All-share

Trading in Eurotunnel shares was suspended in Paris this week as the operator
of the channel tunnel said that it was in advanced negotiations over its massive
£6bn debt. The company is in discussions with its creditors as well as
investment banks Goldman Sachs and Macquarie. Two weeks ago Eurotunnel’s shares
were suspended in London after delaying the publication of its accounts.