Euronext NV is considering creating a market for private securities, potentially ramping up competition with the London Stock Exchange Group Plc as bourses seek to offer investors access to fast-growing private companies.
Euronext has held discussions with clients about a potential European Union-focused venue, which could allow companies to raise fresh funds and shareholders to sell stakes, the people said, asking not to be identified as the information is private.
That potential dual function would differentiate it from LSEG’s own private market, which only offers trading in existing shares.
Talks about the new market are in the early stages, and there’s no certainty that Euronext will proceed with the plans, the people said. A spokesperson for the exchange group declined to comment.
The discussions come after the EU carried out a consultation earlier in the year on ways to make it easier for private equity investors to sell their stakes. The rise of venture capital and growth of PE means fewer companies are opting for stock listings as they can raise large amounts of money without turning to an initial public offering.
The number of IPOs has also been hurt by the rise in borrowing costs that caught many private equity funds by surprise, making it difficult for them to dispose of companies at valuations they consider acceptable. Companies that do eventually IPO are now typically larger and often prefer to sell shares in the US where valuations are higher, hurting European exchanges.
“The potential creation of a pan-European regulatory framework for a private markets platform may warrant further consideration as part of the broader private-to-public financing continuum,” Euronext wrote in a submission to the EU consultation.
LSEG’s venue began last year and operates under a regulatory framework known as Pisces. It has managed share sales by workers at companies like Wayve Technologies Ltd. and Digital Moneybox Ltd.
Written by: Charles Capel, Pablo Mayo Cerqueiro, and Laura Noonan @Bloomberg
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