Different media have been echoed these days of the great shortage of outputs on the Stock exchange during 2019. A worrying phenomenon because a market of equities with critical mass, which encourage investors to invest in companies and enable these to raise capital is important for the financial system fulfils effectively its function. It is the basis for enterprises to be financed in greater measure through the market and are less dependent on bank financing, and is the key to a model of financing the economy more resilient and better from the point of view of financial stability.
In the united States, the economy, especially innovative and recovered much more quickly and easily tone after the financial crisis, the direct financing in the market, attracting capital or issuing debt instruments, representing approximately half of the funding companies; in Europe only the fourth party, and our country is not precisely among those that stand out in this aspect. More companies also means more companies, more transparent and even a society is something more democratic: it means more business to the scope, directly or via funds of any investor.
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in Addition, in these times of enormous and growing importance of passive investment and, in general, the institutional investment —from large fund managers, including pension funds, and sovereign wealth funds, countries more securitized, with more companies listed, that these weigh more, receive in a natural way greater investment flows.
The lean harvest of 2018 and the very bad, 2019, which is common in Europe and still more marked in Spain, probably in part because of our troubled political life, has been due to various reasons. Among them, the low interest rates that make it easy to turn to other means of financing, and the environment, pessimistic, end-of-cycle and uncertainty, exacerbated by factors such as trade disputes or the Brexit. The final months of 2018 were very negative for equities and a good part of 2019 has been dominated by a sense of precariousness, even though the year has resulted in good set for the investment in shares.
To all this has been added a factor of nature structural: the development that is taking, also in Spain, venture capital and general private equity or private capital, one of the phenomena of our time, which to my mind is extraordinarily positive, but competing hard with the option to exit the market, already as an alternative, as retrasándola, both in terms of process as well as in price. The process of ipo are complex, relatively visible and take their time, at least six or eight months, with the consequent uncertainty about what will be the attitude of potential investors in the D-day (tell that to the Cepsa). The entry into the capital, or the sale to a venture capital fund —and there are very large, capable of taking control or significant interests in companies of great size— can consider, in general, in a way that is discreet and fast. In addition, the risk capital pays particularly well, among other things because you value more easily expectations of improvement in the management, the own risk capital funds promoted in a decisive manner.
In any case, I think that the trading on the Stock exchange —on the primary market or in alternative markets such as the MAB— continues to be attractive and interesting for many reasons and that will continue to be the option of long-term reference for businesses that are more ambitious (in the best sense). Be in the Bag expands the possibilities of financing, drives the level of professionalism and rigor in the management, it is an incentive to grow —especially important in a country with too many companies, too small—, gives prestige, strengthens their brand, helps attract and retain talent… And, being compatible with the maintenance of control, is a very natural solution, after the first generations to the family firms of success that reach a certain dimension. Yes, must be a little brave and throw some salt to life, to what you are accustomed to the entrepreneurs of the pure strain.
In these moments is having a broad debate in Europe on the need to advance, after Brexit, the project of the Union of the Capital Market and there is agreement that, as part of it, there are that promote the outputs to Bag. There are many things that can be done: to lighten something more, without prejudice to the necessary rigour, certain requirements and certain obligations arising from the listing (although the current regime is already quite nice); support for formulas of entry into the market more simple than the one up to now has been the standard formula, as the listings with direct dissemination subsequent; it does not apply in any case only to the listed companies, duties of information, or another type that might make sense to require all companies; extend in certain respects the regime of the corporate of the companies listed in the first market to small and medium-sized enterprises that decide to quote; to support those who invest in them long-term with some tax incentive smart; to correct the bias that there is in tax laws in favor of the debt to capital funding, etc.
For a country like Spain, that must suck to have an advanced economy and provide quality jobs and to establish itself as one of the leading countries of the European Union, to encourage more firms to enter the stock market has become an especially important target.
Sebastian Albella is president of the National Commission of the Market of Values
