COVID-19: How Stock Exchanges Can Help Corporates into the ‘New Normal’
Mark Oliphant, Head of Communications at The International Stock Exchange Group, takes a closer look at how stock exchanges can help companies navigate through COVID-19 and beyond.
The signs were not very good for stock exchanges as it was.
Even prior to the spread of coronavirus (COVID-19) during the first half of this year, 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 have been able to access government assistance 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 companies, both short and long term.
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. Since the onset of the pandemic, we encouraged current and prospective 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 corporates 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 firms specialising in raising debt finance globally. 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).
The impact of COVID-19 has touched every business.
All these products may be eligible to enter our green market segment TISE GREEN. More broadly, we’ve witnessed a wave of listed sustainable and social bonds in response to COVID-19. Indeed, it is these issuances which beg the question about how we will operate as a society in the future and what this means for the future of many businesses
Stock exchanges such as TISE can provide a complimentary offering to the private markets, and one which is well placed to help corporates navigate through the teeth of COVID-19 as we emerge out the other side into the ‘new normal.
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