COVID-19: How the public markets can help business leaders
Wednesday, 29 Apr 2020
Mark Oliphant from The International Stock Exchange Group takes a closer look at how stock exchanges can help business leaders navigate through COVID-19 and beyond.
The signs were already not very good for the public markets.
Even prior to the spread of coronavirus (COVID-19) through Europe in March 2020, Initial Public Offerings (IPOs) have been steadily falling in recent years. There has been a growing trend for companies to stay private for longer, with business owners increasingly choosing to exit by selling to private equity.
On the face of it, COVID-19 seemed only likely to reinforce this trend as it sent the major stock exchange indices into a spin, listed open ended real estate funds were forced to suspend as the property market froze with uncertainty and quoted companies struggled to grapple with reporting and filing obligations.
But the impact of COVID-19 has touched every business.
Companies can access the government assistance now available in addition to regular sources of funding and of course, private equity houses continue to sit on plenty of dry powder. However, there is still room for stock exchanges, such as The International Stock Exchange (TISE), to play a role in helping business owners, both short and long term.
“unlike most traditional stock exchanges, a responsive approach is integral to our offering”
Established in 1998, TISE provides a responsive and innovative exchange where today there are more than 3,000 listed equity and debt securities with a total market value of more than £350 billion.
Given these uncertain and rapidly changing times, we continue to encourage issuers on TISE to engage with us at an early stage regarding the impact of COVID-19 on their business and as such, what it means in respect of their listing.
We are taking a pragmatic approach to balancing the interests of all market participants, including both issuers and investors, in order to ensure the continuation of a fully functioning market. This is a similar approach to many other exchanges, which demonstrates the willingness of those overseeing venues to ensure that the public markets can mitigate the effects of COVID-19.
However, unlike most traditional stock exchanges, a responsive approach is integral to our offering. It has helped attract trading companies, investment vehicles such as Real Estate Investment Trusts (REITs), and debt issuers to our market. This responsiveness can assist business owners as they start to turn their attention to the longer term.
While traditional venues are seen as overly bureaucratic and expensive for a trading company listing, TISE provides a more proportionate and cost-effective offering which makes it viable for businesses to IPO at an earlier stage, perhaps offering existing owner/managers a partial or full capital exit. Similarly, TISE is home to more than 30% of all UK REITs because the regime is pragmatic and the fees are very competitive.
Equally, TISE’s value for money and efficient listing service have attracted companies ranging from blue chip multinationals through to UK corporates which are raising debt finance. This includes securities issued by private equity groups to help finance their acquisitions of portfolio companies (which of course, themselves, could be exited via a listing at a later stage).
All of these products may be eligible to enter our green market segment, TISE GREEN and more broadly, recently there has been the first wave of listed sustainable and social bonds in response to COVID-19.
Public markets in the form of responsive exchanges such as TISE can provide a complementary offering to the private markets and one which is well placed to help business leaders navigate COVID-19, both in the immediate term and as they revisit the future strategic direction of their companies.