| Neuer Markt index, price floor |
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| Source: Deutsche Börse |
The Nuovo Mercato is "a new market for small and medium-size companies [that] can help to develop a real market culture in our country." Thus Massimo Capuano, chief executive officer of Borsa Italiana - the company that runs the Italian stock exchange, introducing Italy's new equity market.
The Nuovo Mercato - literally the New Market - will be the Italian equivalent of Germany's Neuer Markt and France's Nouveau Marché: a stock market especially designed to give high-growth companies access to funding.
Net assets of L2.5 billion ($1.4 million), a free float of at least 20% and the ability to grow fast will be the main listing requirements. Biotechnology, hi-tech and telecommunications companies are the most likely candidates for this high-growth exchange. But Capuano intends to leave the door open to other types of company. "If a company from a traditional industry sector has innovative projects and is able to keep pace with growing companies, we will welcome it into this market," he says.
The official presentation of the Nuovo Mercato will be held in Milan on May 5, but the first trading is not expected until the beginning of July. Technical details are almost ready. As is the case with its equivalents beyond the Alps, the Nuovo Mercato will be closely linked to the main stock exchange. The 140 members of the Italian stock exchange will have free access to the new market and they will have a special page on their screens to trade its companies. But Borsa Italiana is also trying to lure new members with a series of initiatives. The most important include roadshows in Italy and abroad and fee-free membership for the first year for new members.
The biggest problem at the moment is identifying and attracting suitable companies. Borsa Italiana has a target of 10 companies to be listed by the end of the year. However, although Italy's economy is characterized by a large number of medium-size companies, the country lacks a developed equity market culture and the concept of the public company is still not widespread. Owners and not managers run most of the main Italian companies and the world of medium-size companies is traditionally far more difficult to penetrate.
A confident Capuano is relying on a new wave of young entrepreneurs for the success of the initiative. "Small communications and IT companies are usually run by young people," he says. "They appreciate the value of the market. We have met a lot of them and they are enthusiastic about the new market, especially for the opportunity to promote their companies in Europe."
Nuovo Mercato has already agreed to join Euro.NM, the European network of domestic high-growth markets and Capuano hopes this could prove a strategic asset for the success of the new market. Italian companies need to grow abroad to grow fast and Euro.NM can offer them the window on the rest of Europe they need.
Euro.NM is, at the moment, a network of five domestic high-growth markets: Germany's Neuer Markt, France's Nouveau Marché, Euro.NM Belgium and the Netherlands' NMAX. And it is trying to expand beyond the heartland of Europe.
The stock exchanges of Copenhagen, Stockholm, Helsinki, Oslo and Zurich have already signed a letter of intent declaring an interest in Euro.NM membership. Negotiations with the London Stock Exchange are proving protracted. Officials of the UK stock market have stated that they are considering ways to join Euro.NM. Some people believe the London Stock Exchange is planning to create a London New Market affiliated to Euro.NM made up of a few high-growth companies from AIM and a few high-growth companies from the main market list.
After three years, Euro.NM encompasses 190 companies and 200 should be listed by April. Total market capitalization is €44.6 billion ($40.9 billion). But the network is still far from being an integrated market and domestic investors still dominate the component markets.
Only in Paris and Brussels is it possible to trade on any of the other new markets. In Brussels, traders can tap France's Nouveau Marché and Amsterdam's NMAX and in Paris Euro.NM Belgium is available. A linkage between Paris and Amsterdam is expected later this year. Only next year will all the markets be linked with the most important and liquid one, Germany's Neuer Markt.
The Neuer Markt is by far the largest of the Euro.NM organization and represents over 80% of the network's market capitalization. In its two years of life, it has been highly successful. For example phone service provider MobilCom and automotive engineer Bertrand have built up a combined market capitalization of more than Dm600 million ($335 million).
Nobody is expecting Nuovo Mercato to reach such figures, but it will not take long to see if Capuano's bet pays off. Luciano Mondellini