© Reuters. Coat of arms of Atlantia in Rome. Photograph: Guglielmo Mangiapan/Reuters
by Elisa Anzulin
Milan (Reuters) – The next edition of Atlanta (BIT:) from Piazza Affari will subtract another 19 billion from the market cap and bring the number of delistings from the beginning of January to 12, raising concerns about the health of the Milan Stock Exchange.
Regulators and market authorities are trying to reverse course and boost the position of Italy’s stock exchange, which was founded more than 200 years ago.
Barbara Longhi, Head of Citations in Italy for Euronext (EPA :), believes that being a listed company, with the ensuing obligations and presence of outside investors, pushes companies to innovate and develop.
“It gives companies that extra equipment that helps them grow,” said Lunghi.
But the problem with Italy’s low number of listed companies runs deep: many family-owned companies are reluctant to relinquish control and do not consider going public unless they need money for mergers and acquisitions or other expansion strategies.
In recent months, Consob has approved a series of measures to streamline the approval process for initial prospectuses, and has given the go-ahead for drafting in English as well.
Borsa Italiana has also made some changes to its regulations to make listings easier.
In March, the government began considering broader legislative intervention to address problems crippling capital markets, but the process was held up by a change in executive power after the right-wing coalition won elections at the end of September.
Exodus from Milan
Since the beginning of January, 11 Euronext companies have left Milan, including the Agnelli family company, Exor (BIT :), which this summer moved to the Amsterdam Stock Exchange where it already had its registered office.
Following the positive outcome of a public tender offer by Edizione and Blackstone, Atlantia will also be delisted.
Autogrill is expected to follow the same path in the coming months following its merger with Swiss Dufry, while the fate of shoemaker Tod’s (BIT:) remains uncertain following a failed takeover bid by major shareholder DeVa Finance.
CNH Industrial (BIT:), which is listed in both Milan and New York, is also considering ending its dual listing and focusing on the New York Stock Exchange.
Downsizing in the number of listed companies is a broader trend shared by many European exchanges, as lower prices and the availability of cheap funds have made delistings worthwhile.
In the face of several writedowns, there have only been four IPOs this year on the regulated market, including the listing of Iveco, which nonetheless grew out of a subsidiary. They are joined by two more companies, which have moved from the smaller Euronext Growth Milan to the main market.
The situation is different if you look at Euronext Growth Milan, which is a marketplace for small and medium-sized enterprises with minimal access requirements. In 2022, it counts 18 new listings, but the overall market capitalization is still very low.
The dearth of Italian IPOs is a longstanding problem.
Over the past 20 years, the primary market has lost 268 listed companies and gained only 185, according to research by Intermonte published in March. In contrast, the less regulated small and medium companies market attracted 263 listed companies and delisted 68 companies.
Alberto Villa, head of equity research at Intermonte, explains to Reuters that the reasons that prevent companies from being listed lie in the small size of many companies, in the financial structure that is unbalanced towards bank debt, in governance that is often familiar or in any case not inclined to openness to the market. Added to this is competition from alternative investors such as private equity and also a cultural issue.
The fact that there are relatively few companies listed on the stock exchange has historical roots, according to Andrea Beltratti, professor of political economy at Bocconi University in Milan.
“On the other hand, the demand for financial assets and stocks has not been strong in the Italian culture,” Beltratti explained, adding that the near-fixed stock market and the poor performance of the economy have not helped in the past 20 years.
He added, “On the supply side, the strong presence of banks and other financial intermediaries has replaced markets, unlike what happened in, for example, Anglo-Saxon economies.”
Beltrate then explained that if on the one hand the listing brings reputational benefits and facilitates the raising of capital, on the other hand there are also costs related to regulation, the need for transparency and the many conversations with investors that must be taken into account.
Beltratti added, “I don’t think these problems can be solved in months or even years, because it is a cultural issue.”
(Translated by Enrico Scacovelli, Editing by Sabina Suzi)