Wednesday, January 26, 2011
Thursday, January 13, 2011
Deutsche Börse Most Attractive Listing Venue in an International Comparison
Study confirms that Frankfurt offers highest liquidity and lowest capital costs/ Considerable IPO potential among German SMEs
Deutsche Börse offers companies the lowest capital costs among the world’s leading stock exchanges. This is the conclusion reached by an independent study presented by Professors Christoph Kaserer (Munich’s Technische Universität ) and Dirk Schiereck (European Business School ) at the German Equity Forum on Monday. Deutsche Börse offers the lowest capital costs in all three segments - Prime, General and Entry Standard - for both the actual IPO and for ongoing listing. Liquidity on the Frankfurt stock exchange is also higher than at the other trading venues.
The study confirms the results of a survey published by the professors last year. The current study compares the terms and conditions that apply to a listing with Deutsche Börse with those on the following exchanges: Euronext, Hong Kong Stock Exchange, London Stock Exchange, Nasdaq and the New York Stock Exchange. A total of over 2,200 IPOs were examined over the period from January 1999 until March 2007.
The attractiveness of the various exchanges for issuers was analyzed using a valuation system developed by the professors, which is based on eight criteria. These parameters measure a number of factors including the costs of market access, the subsequent costs for further capital increases and liquidity. With an overall score of 2.0, Deutsche Börse’s Prime Standard and General Standard come in 1st compared to the other main markets, followed by Hong Kong’s Main Board (2.9), the NYSE Large Caps (3.0), Euronext’s Eurolist (3.1), the LSE’s Main Market (3.4) and Nasdaq’s Large Caps (3.5). As far as the alternative markets are concerned, the Entry Standard is in pole position with an overall score of 1.9. It is followed by the NYSE Small Caps with a score of 2.6, Euronext’s Alternext (2.8), the Nasdaq Small Caps (3.0), the LSE’s AIM (3.4) and the Hong Kong Growth Enterprise Market (GEM) (3.5).
The total costs of an IPO in Frankfurt average 8.3 percent of the issue volume. Deutsche Börse offers significantly lower overall costs than Nasdaq (9.5 percent), London (12.6 percent) and Hong Kong (14.6 percent). The zero-trade ratio (ZTR) was also examined. This parameter shows the ratio of days without trading in a particular share to the trading days. A low ZTR means that trading activity is high. The study shows that Frankfurt has the highest liquidity in an international comparison, both among the main markets and in the alternative segment. The ZTR in the Prime Standard and the General Standard, as well as in the Entry Standard, comes in at 1.39 percent. By means of comparison, London’s Main Market scores 9.15 percent and its AIM 39.89 percent, while Hong Kong’s GEM also returns a far higher ratio with 33.42 percent.
Frankfurt’s Entry Standard also offers the lowest spreads, i.e. the difference between the buy and sale price, with 2.23 percent, compared with 4.15 percent on the GEM, 4.52 percent on Alternext and 7.22 percent on the AIM. The Prime Standard and General Standard also offer extremely low spreads at 0.62 percent, followed by Eurolist (0.71 percent), Nasdaq (0.74 percent), Hong Kong’s Main Board (1.04 percent) and the LSE’s Main Market (2.0 percent).
“The results of this independent study once again confirm Frankfurt’s attractiveness as a listing venue in a global comparison – for small, medium-sized and large companies alike”, said Rainer Riess, Managing Director, Cash Market Development at Deutsche Börse.
Deutsches Aktieninstitut presented a study on German listings at the Equity Forum. German SMEs show considerable potential for future IPOs. This is the main conclusion reached by a survey performed by Deutsches Aktieninstitut in cooperation with Deutsche Börse AG. All in all, around one quarter of the companies surveyed are either aiming to go public, or are at least considering an IPO in principle. “Compared to 2003, when we published the results of a similar survey, SMEs have increased their capital market focus considerably”, said Rüdiger von Rosen, Head of Deutsches Aktieninstitut. This is an encouraging sign for the acceptance of equities as a financing instrument.
Deutsche Börse and KfW Mittelstandsbank have been organizing the German Equity Forum twice annually since 1996. With over 5,000 participants, the German Equity Forum is one of the major capital market conferences for companies seeking equity financing.
Sunday, January 9, 2011
Merger Law Associates Ltd. - Frankfurt Exchange Chinese Companies Welcome
China is as of primary importance to The Frankfurt Stock Exchange and its parent company Deutsche Boerse, the largest exchange organization in the world. Deutsche Börse sees considerable growth and enormous potential in China. It is expanding its base in the region to capitalize on its existing business relationships and to build new business.
- provide Chinese investors access to European products
- give wide exposure of Chinese products to the European market place
- help to develop domestic markets in China
- benefit from the growth by collaborating with local players
The business generated by Deutsche Boerse in China has been increasing steadily for years and will continue to grow organically while Deutsche Boerse Group is simultaneously developing new opportunities in areas such as Listing Chinese Companies, Trading & Clearing, Custody & Settlement and Market Data & Analytics. Besides a number of Memorandums of Understanding (MOU) signed with various Chinese partners, Deutsche Boerse has also taken concrete steps in the following fields:
Chinese Company Listings
Deutsche Boerse and its subsidiary the Frankfurt Stock Exchange continue to strongly expand its relations with China in order to be an effective and reliable partner for Chinese companies. For example, it organizes capital market events and listing seminars in China in collaboration with its listing partners, and is expanding its listing partner network to include Chinese intermediaries and capital market participants.
The Frankfurt Stock Exchange listed the first Chinese company on its Open Market segment on March 30, 2007 and listed the first Chinese company on the Prime Standard segment of the Frankfurt Stock Exchange on July 6, 2007. Since then many more Chinese companies have chosen a primary listing on the Frankfurt Stock Exchange. There are more Chinese companies already in the pipeline for this year as well.
The XETRA® Trading Platform
Deutsche Börse’s own XETRA® electronic trading platform is widely known as the most efficient and flexible automated trading system for fully electronic securities trading in the world. China’s largest stock exchange, the Shanghai Stock Exchange, has licensed Deutsche Börse’s Xetra® electronic trading platform, which Accenture will adapt and implement specifically for the Chinese market. Xetra’s trading technology was chosen on the basis of its performance record of high scalability, speed, reliability, quality of core technology and the ease with which it can be adapted in other markets.
Clearing & Settlement
China Government Securities Depository Trust & Clearing Co. Ltd (CDC) has opened an omnibus account with Clearstream, which is owned by the Deutsche Börse Group. The qualified members of CDC are now able to settle and safe keep international securities via CDC’s account with Clearstream. The partners are discussing further cooperation in the field of collateral management.
Market Data & Analytics
Deutsche Börse and the China Securities Index Company (CSI), a joint venture between the Shanghai Stock Exchange and the Shenzhen Stock Exchange, signed a sales cooperation agreement on September 25, 2007. Under the terms of the agreement, Deutsche Börse acts as an exclusive sales partner for the CSI300 Index’s license of the ETF issuer in Europe.
Why the Frankfurt Stock Exchange?
For approximately ½ the cost of going public on the OTCBB, Chinese companies can go public on the Frankfurt Stock Exchange. Moreover, companies that trade on the Frankfurt Stock Exchange do not have to deal with the often criticized and overly burdensome requirements of Sarbanes-Oxley. This in itself is why many companies from all over the world are choosing the Frankfurt Exchange over the U.S. stock exchanges.
For these reasons and many more, the Frankfurt Stock Exchange listing is fast becoming the better choice for Chinese Companies that want to go public.
Monday, January 3, 2011
Going Public Through A Reverse Merger
A Reverse Merger may be the quickest way to go public but is it the best? We look at a few drawbacks of using a reverse merger to take your company public.
For many business owners, the transition from a private company to a publicly-traded corporation is just out of reach.
An IPO is a daunting process, and the combination of limited resources and limited expertise can intimidate even the hardiest entrepreneurs. But what if there was a way to take your company public without the hassle and expense of an IPO?
The idea of circumventing the usual IPO process sounds like it should be illegal, unethical, or both. However a reverse merger provides a shortcut that is both legal and logical. Although it may seem complicated, a reverse merger can be a lot easier than you think. Here's what you need to know:
What is a reverse merger?
In its simplest form, a reverse merger is when a smaller company takes over a larger one for the benefit of becoming a publicly-traded corporation. Usually, the publicly traded corporation is known as a "shell corporation" because it has little or no assets. Even though it continues to be a publicly traded corporation, its assets have evaporated through bankruptcy or liquidation and now all that remains is its internal structure and shareholders. The private company obtains the shell company by purchasing controlling interest through a new issue of stock.
Typically, the new, merged company will take the name of the private company, installing a new board of directors and corporate officers. At that point, the merged corporation files a few forms with securities regulators and works to maintain the minimum number of shareholders required for inclusion in stock exchanges.
The benefits of a reverse merger are fairly obvious. From the private company's perspective, a reverse merger eliminates the expense of an IPO as well as the time and hassle involved with making the transition to a public entity. The time factor should also be taken into consideration since a reverse merger will usually allow you to make the transition more quickly than an IPO.
Unfortunately there can be some drawbacks involved in using a reverse merger as a tool for taking your company public. The first may be the cost of the shell company itself. As more people have become aware of the benefits of reverse mergers, the cost of shell companies has risen sharply. It's possible that you could end up spending $300,000 or more in a reverse merger scenario and the owner of the shell company could retain a percentage of ownership in the new company.
Additionally,if the shell in a reverse merger is not new and clean it could involve the same risks you would incur in buying any business. Pending litigation, hidden debts, and inaccurate reporting can all come back to bite you if you fail to perform adequate due diligence. It is especially worthwhile to explore the reasons why the shell company went out of business in the first place. If the issues aren't resolved or haven't been explained to your satisfaction, you're probably better off moving on to another candidate.
Best is always getting a clean shell that has never traded. Merger Law Associates are specialists in creating clean shell companies.
Contact: Merger Law Associates Website
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