The Scandinavian offshoot of NASDAQ offers a number of advantages – and recorded 83 listings last year alone. We have interviewed Senior Vice President Adam Kostyál about details and differences in comparison with other markets.
GoingPublic: Mr. Kostyál, Nasdaq Nordic recorded 83 new listings last year. What makes this stock market so attractive for issuers?
Kostyál: What makes the nordic market so unique, is that 90% of our listings are below a market cap of EUR 600 m. We are a typical SME market with a very solid ecosystem. There are a lot of investors, family offices and funds, who are specialized in SME investments, and a number of advisors specifically focused on supporting smaller companies. That’s a huge USP. Another plus is the strong equity culture in Sweden. The vast majority of Swedish households are engaged in shares – either directly or through funds – which makes Sweden stand out compared to other European countries. So we have a very vibrant capital market culture in the Nordics. The people want to participate in the success of growth companies.
Which type of companies, in terms of industries and size, normally go for an IPO at Nasdaq Nordic?
We cover all sectors at Nasdaq Nodic. The life science sector is very strong – it accounts for 20% of our listings. An interesting aspect is that investors are increasingly looking for growth stories. A large part of the companies in our growth market, which is called Nasdaq First North, are pre-profit. Moreover, I think that growth companies will continue to show an interest in our stock exchange.
For the benefit of our readers, could you please explain Nasdaq Nordic‘s structure and its advantages in comparison with other markets?
Nasdaq owns seven exchanges in the Nordics, among them the three Baltic states as well as Iceland, Sweden, Denmark and Finland. The Swedish market is the most active one. On each market we have the Main Market and Nasdaq First North, which is our junior growth market, comparable to Germany‘s „scale“ segment or the AIM in London. In terms of rules and structures, there are no big differences to other EU markets. One of our great advantages is the very distinctive ecosystem of investors, advisors and other stakeholders specifically supporting SMEs, willing to believe and to invest in small companies. The strength of our market lies in the fact that we let only the „right“ companies list. If ony of these SME will succeed, it has an enormous impact on other companies.
What can other stock exchanges, e.g. German ones, learn from Nasdaq Nordic?
Our business is not so different from other markets‘. The ace up our sleeve is our equity culture, which is deeply rooted in Northern society. The governments of the Nordics, especially Sweden‘s, incentivises its people to buy shares. Unfortunately, this is not the case in Germany. The Nordic people feel responsible for their monetary investments. So, by default, they are more willing to invest in smaller sized companies – because retail investors don’t have the same amount of capital as institutional investors or big funds. That’s why the SME market is so strong in the Nordics; but that’s not a given and, indeed, very special.
At the moment, there are a great many geopolitical uncertainties. e.g. Brexit , US foreign policy etc. Given these difficult conditions: how many IPOs are expected to launch at Nasdaq Nordic in 2019?
Our IPO pipeline is very strong, but we are of course not immune to uncertainties. Looking at our current pipeline, we will be able to list roughly 30 companies at Nasdaq Nordic from March to June. We can see on both markets – Main Market and First North – that the current global situation is quite a challenge. Nevertheless, there are interesting companies with solid business models in the pipeline. Therefore, we believe that 2019‘s IPO activity will be similarly high as last year‘s. Once the uncertainties have been overcome, the IPO window will be open again.
One last question: you have been working at Nasdaq Nordic for more than ten years now. What have been your personal highlights so far?
I am proud of the development at the Nordics over the last ten years. The Nordic financial market has become more and more visible all over the world. I also like the fact that we have such a good and familiar relationship as well as a healthy dialogue with the listed companies. This allows us to evaluate if this market is strong enough to support international companies. I am very hopeful for the future and I am looking foward to a lot of IPOs in 2019 and the upcoming years.
Mr Kostyál, thank you for the conversation. This interview was conducted by Svenja Liebig.
Foto: Alexi Tauzin@stock.adobe.com