Camille Leca, Chief Operating Officer Listing in France, gives an update on a very dynamic primary equity market in this interview with Finascope. In addition to the many traditional IPOs, at least five new SPACs are also expected to be launched in Paris by the end of the year. The stock exchange intends to position itself at the centre of the financial ecosystem, with private equity as a partner rather than a competitor.
Camille Leca, can you tell us about your career?
I have been working for ten years at Euronext, which I joined in the listing department. My job was to develop an offering for SMEs and SMIs to convince them of the value of the stock market. At the time, I contributed to several market initiatives, via the EnterNext subsidiary, and launched training programmes such as TechShare.
I then became chief of staff to the CEO of Euronext Paris, before taking over the management of listing activities. I coordinated operations and relations with listed companies, both on commercial and operational aspects.
Today, I am in charge of promoting equity and debt products and services to companies in France, Portugal and Spain. The aim is to increase the visibility of companies to investors, with a view to attracting more of them to the markets.
I also sit on the board of directors of Euronext Paris, the Oslo Stock Exchange and an Italian company that supports unlisted companies in their development. Finally, in the context of our highly regulated businesses, I participate in commissions at the AMF and ESMA on these corporate finance and listing issues.
"There is a component of market animation, a role of promoting the markets to the public authorities, lobbying, defending our interests and highlighting the great stock market stories."
CaMILLE LECA
What is your job today?
My job has three facets. Firstly, I support company directors at a very early stage in their reflections on their growth projects. We look together to see if the markets can offer a solution adapted to their problems.
As this is not always the case, we also work in partnership with private equity funds and other financial intermediaries to provide them with the best advice.
In addition to prospecting, I look after companies that are already listed and help them with their stock market issues: inclusion in indices, liquidity arrangements, capital increases, dividends, etc. We work to make them more visible to investors, whether through road shows or the publication of quantitative financial analysis reports.
Finally, there is a market animation component, a role of promoting the markets to the public authorities, lobbying, defending our interests and highlighting good stock market stories. A lot is being done by the public authorities around unlisted companies with initiatives such as the FrenchTech 120 or the Next40. We are thinking about promotion strategies for companies that could be listed on the stock market.
So you sometimes advise aspiring stock market issuers to go unlisted as a first step?
As a stock exchange, we have an interest in the success of listed companies. If we think that the stock market is not suitable for them, we can very well direct them towards funds or banks. Our strength is to position ourselves at the centre of the ecosystem, as a medium to long-term partner. In a way, we are a listed commercial company that also assumes a general interest role.
"After the private equity stage, companies come to the stock market more mature, more advanced in their journey, with clearer business plans."
Private equity has thus become a partner of Euronext, as much as a competitor.
After the private equity stage, companies arrive at the stock market more mature, more advanced in their development, with clearer business plans. Funds also bring in business for us. 75 % of the companies that are listed come from them. IPOs are only delayed.
What forms does this partnership with private equity take?
We seek to facilitate the link between the public and private worlds. Our PE Share training programme is aimed specifically at fund directors to train them for an exit via the stock market. They meet other funds that are more familiar with the stock market and learn about the technical aspects of listing and liquidity management (lock-up clauses, etc.).
This also takes the form of informal meetings. In the end, we are seeking a balance in our relations with the funds, both competitors and partners, even if we favour the second aspect.
There are a lot of announcements of new IPOs at the moment? Is this a return to grace for the stock market?
In the last two years, the number of IPOs has been limited. Private equity offered higher valuations than the market. Today, and especially since 2020 and this year, we can speak of a return to grace of the stock market with a growing interest of institutional and private investors. Numerous projects of beautiful companies are being prepared. Some are already public. We have every reason to be optimistic, even if we must remain cautious. When there are many deals, investors are more selective.
Some of the announced operations may well not take place...
A company may decide not to proceed with a project. For example, because the placement did not go well. Or because other proposals were made by another company or fund along the way. Other options can be explored during an IPO journey, which is sometimes used to raise the stakes. Generally, IPOs still go through the process.
"The innovation segment, which includes digital and healthcare technology, accounts for more than 75 % of operations."
How many projects are planned between now and the end of the year?
We are in great demand from the management. And 2021 promises to be a historic year in terms of the number of transactions. Each year, Euronext Paris hosts an average of 20 to 30 IPOs. However, an equal number of candidates have already been declared, only by the beginning of the school year in September. Knowing that the last quarter is generally very active.
What is the breakdown in terms of sectors?
The innovation segment, which includes digital and healthcare technologies, accounts for more than 75 % of operations.
Are issuers coming to take advantage of high valuations?
Valuations are obviously a factor in the decision to go public. For example, with the objective of a future acquisition financed by an exchange of shares. But valuation cannot be the only driver of an IPO, which is a strategic decision.
Are companies more likely to choose a European listing than a US listing?
In practice, very few French companies have chosen the United States. There have been a maximum of 4 or 5 in ten years and they have had varying fortunes. Moreover, the bosses talk to us about it much less than before. In Europe, the pools of investors are very large. The Americans are well aware of the expertise of French engineers and are also coming to invest here. In the life sciences sector, 50 percent of investors are Anglo-Saxon. You don't have to be listed in the United States to have access to them. Moreover, the US markets are quite volatile, with heavier penalties in the event of disappointment. Listing prices are also higher. In France, a full listing costs about 8 to 10 % of the amounts raised. This only represents the bankers' commission on the other side of the Atlantic.
How do you compare with your competitors, such as Deutsche Boerse or the London Stock Exchange?
We have grown a lot in recent years. There are now nearly 1,900 companies listed on Euronext, including the Italian stock exchange, which Euronext recently acquired. And we are by far the leading European exchange in terms of IPOs. All markets are specific, but our main competitors today are private equity or the sale to another corporate.
What can be improved to boost the quotation in France?
From a regulatory point of view, we must ensure that investors are protected. For example, it is quite natural to regulate the way companies communicate on ESG aspects. But the rules must also be adapted to the size of companies, especially SMEs. Our lobbying teams in Brussels intervene in this sense when new standards are issued. In terms of marketing, we need to work on attracting other candidates for listing. We need to promote good stock market stories.
Is the recent acquisition of Borsa Italiana contributing to the strength of the primary market?
The notion of critical size has positive virtues in terms of attractiveness. The more listed companies there are, the more investors, specialised analysts, etc., will be interested in the company.
"We welcome the emergence of this phenomenon in Europe. But SPACs, which follow a different logic, will not replace IPOs.
What do you think of the launch of a company-initiated SPAC (Special Purpose Acquisition Company) announced last week by Accor?
This is a first in France. Two SPACs have already been listed in Paris. The market is developing and becoming more structured. And this will probably not be the last SPAC launched by a company on our markets.
Do these new structures help you to reconcile the two worlds of the unlisted and the stock market?
We very much welcome the emergence of this phenomenon in Europe. But SPACs, which follow a different logic, will not replace IPOs.
How many SPAC listing projects are there?
We are receiving many expressions of interest. We expect at least 5 SPAC IPOs by the end of the year in Paris, including those already announced by Accor in hotels and 360 Capital in technology.