To discuss the growing opportunities for companies in the DACH region (Germany, Austria and Switzerland), Senior Vice President and Head of European Listings, Adam Kostyál, sat down with us to talk about how Nasdaq's First North Growth Market is helping small-medium sized enterprises (SME's) in the region grow their businesses.
What is interesting about companies based in the DACH region?
The DACH region has been underserved when accessing the public markets at an earlier stage. While we continue to see some massive companies with great, scalable business models and good governance, seasoned entrepreneurs are frustrated that they are not able to list their companies on their local markets. But in the Nordic region, there's a strong understanding that our market is punching above its weight and could potentially serve companies in the DACH region as well. This combination of lack of support—from the public market point of view— and good entrepreneurs with scalable, well-run business models, is something that we're looking for in terms of attracting more companies to the First North Growth market.
What are the benefits of a Nasdaq First North Growth Market listing for an international company?
For an international growth company, listing on the First North Growth Market means they can diversify their growth model by leveraging the exchange abroad. Beyond just raising capital, they get liquidity, they get visibility, transparency, credibility, all these different dynamics, which are very important for a small to medium sized companies.
What we can offer them, from a Nasdaq Stockholm perspective, is the Nasdaq brand and the Nasdaq reach in terms of credibility and visibility. But, more importantly, they can also access the ecosystem of similar companies, which the market is interested in and invested in. Therefore, they will not be the only ones listed on the market. On the contrary, they will be in the community of similar companies within similar sectors, and they will have a very knowledgeable market to work with as they continue to grow.
Tell us more about the 2021 record year for Nasdaq’s European Markets
2021 was the culmination of many active years. Year after year, the Nasdaq stock market has proven to be the most active market ever in Europe in terms of the number of companies listing on the exchange.
Our strength continues to be our ability to list small to medium sized growth companies.
It's important to understand that small to medium sized growth companies do not have the same alternatives that a larger company does. What differentiates our market is that we do these micro, small and mid-sized IPOs versus the larger deals that are required in other markets; those companies make our record years.
Last year was a perfect storm in the sense that you had very favorable market environments, many companies that were ready for the public market and a huge appetite from investors for new companies.
With the understanding that these are very volatile times now, the companies that are now on the platform are in a great position to leverage it to raise more capital, to diversify their growth through acquisition and have more credibility and visibility then many of their unlisted peers.
How do you think the market will evolve during 2022?
We’re going through times no one can relate to. It's one thing dealing with inflation, but with inflation and war, I don't think anyone in our generation has experienced it. But, if you look at companies that are on our platform, it's clear they are benefiting from access to the capital markets in a way that unlisted companies don’t. Therefore, they can diversify the way they grow and support their growth and sustain their growth during these tough times.
I would say this volatility is impacting everyone, but certainly companies that are listed with us are in a better spot to be able to support growth through the capital markets. Companies that are looking to come to market are probably waiting to see more stability to set an appropriate price to access the market on. But overall, the interest remains high, both for our growth market, Nasdaq First North and our main market.
German retail company Rebelle recently became the first “green” IPO as they applied for a green designation when listing on Nasdaq First North Growth Market. What are the benefits of applying for a Nasdaq Green Designation?
I think one of the key trends that the markets have been discussing for the last few years is the topic of Environmental, Social, Governance (ESG). For one thing, if a company cannot tell their ESG story in a credible way, there's a risk that they will miss out on investors. We felt it was our role to help companies to tell that story.
We focused on the “E” in this context. We worked with experts to define a new categorization, Nasdaq Green Designations, which allows companies to define themselves as green.
If a company meets these requirements, they can define their company as a green company, according to the standards that we have set.
The CCO and founder of Rebelle, Cécile Wickmann said, “We have chosen Nasdaq First North Growth Market due to its growing focus on ESG impact with strong appreciation for sustainable business models. This and the international and vibrant environment of the Swedish stock market for growing tech and small cap Companies gave us a very welcoming feeling and pursuing this opportunity last year.”
Our first Green Designation companies are already telling us how it has helped them tell a clearer story in the context of ESG to their investors, to their employees and their departments.
We've seen increased interest, especially for small, medium sized companies, because they lack the resources to tell an ESG story due to the complexity of regular ESG reporting standards. But we've been able to set clear standards for those companies to say whether they achieved them or not.