Euronext plans US-style prospectus to boost corporate fundraisings

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Euronext will create a US-style single prospectus for companies raising money on its seven stock exchanges, aiming to make information more accessible to investors and kick-start Europe’s flagging fundraising market.

Executives at Europe’s largest stock exchange group will in the coming weeks develop a standardised form that can be used by companies looking to raise funds on its venues.

The documents would contain key information for investors and be written in English, with an appendix in their local language, chief executive Stéphane Boujnah told the Financial Times.

Its move comes in response to growing concern among European policymakers at the region’s faltering capital markets. Politicians want to harmonise Europe’s fragmented markets, to attract investment and deter companies and capital from heading to the more active US equity market.

Euronext’s aim is to create “one single form, an S1 type of document with one single template so that anyone in Europe in any [equity capital markets] desk, in any asset manager looking for info can go to the same thing,” said Boujnah, referring to the forms companies file with regulators when registering new securities in the US.

Although many European stock markets have hit record highs this year, fundraising in the EU remains comparatively low. New listings and secondary share sales have raised $52.5bn so far this year, a 16 per cent rise on 2023. But US IPOs and share sales have raised $183.6bn, up 62 per cent in the same period, according to Dealogic data.

Many have argued a key difference is the US’s simpler and more unified capital market, which has fewer clearing and settlement houses — as well as legal structures and languages.

Euronext owns stock exchanges across the continent, including the main bourses of Paris, Amsterdam, Dublin and Lisbon. “Each country has similar rules [but] the problem with similar rules is that similar documents are different documents,” Boujnah said.

“Just like there is an ISDA contract for derivatives, we want to have a single prospectus,” he said. He added that the exchange group had discussed the plan with local regulators who “liked the idea” and encouraged the company to try it.

The 60-year old has led Euronext since 2015, making him one of Europe’s longest-serving exchange chief executives. He was “hopeful” that other countries would follow suit with the standardised document but the former banker admitted: “I don’t know how this initiative will be received.”

EU policymakers have spent more than a decade trying to dissolve national barriers and foster a ‘capital markets union’, but their efforts have been hampered by resistance from some countries.

Euronext’s attempt to homogenise offering documents also comes as the company unveiled a new three-year strategy on Thursday, focused on expanding its post-trade, listings and data businesses in a bid to become the region’s capital markets powerhouse. The company also announced a €300mn share buyback plan.

Boujnah wants to boost the company’s clearing and settlement offering across Europe. “Then we’ll see whether other domestic [central securities depositories] are looking for a better future,” he added, hinting at future deals.