Nasdaq Nordics chief: Tech SMEs should take stock of Stockholm
The chief of Nasdaq's European listings division expects to see more Irish tech SMEs picking Stockholm's stock exchange as a fundraising alternative to London.
"Uncertainty is the worst enemy of any IPO," said Adam Kostyál, senior vice president at Nasdaq Nordics. "I'm increasingly seeing an appetite for an alternative to London, because London for obvious reasons is struggling to identify where it will be in a few years' time, what the effect of Brexit will be."
Mr Kostyál spoke to the Irish Independent this week as he visited Dublin to speak at a Software-as-a-Service (Saas) conference - and to meet three local firms interested in going public via the Nordic route.
"We're not looking to come here and fight with the Irish stock exchange," said Mr Kostyál, whose Nasdaq parent is a global rival to Dublin market owner Euronext. "We're simply saying to Irish companies: Look up and see whether an IPO in Stockholm is an alternative."
So far only one Irish company, Dun Laoghaire-based construction software developer Zutec, has gone public in Stockholm - but Mr Kostyál is confident that more are on the way.
He said Nasdaq and Stockholm offered advantages that Paris-based Euronext could not yet provide Irish companies on home soil.
"The challenge for Euronext to come to Dublin and change the IPO dynamic will be fundamentally very challenging. The only thing they will be able to offer concretely is to go to Paris," he said.
Stockholm has become a specialist at bringing smaller-sized firms to market, particularly via its Nasdaq First North growth market. So far this year First North has hosted 27 new listings, including 17 IPOs, and eight firms have won promotion to the main market. Last year First North had 37 IPOs, including Zutec.
He noted that because of Sweden's unusual state pension system, most households in the country of 10 million were shareholders. The pension structure encourages active individual investment choices even into retirement.
"Stockholm has this unrivalled share culture. People wake up and follow the stock market actively because it has a direct correlation to their pensions. This is something we don't see in the rest of Europe," he said. "Even if you don't choose to make a decision, you're exposed to the public markets via the pension's strategic global fund."
While Mr Kostyál said it was too soon to identify any Irish IPO candidates publicly, he described a common profile: firms in medical sciences and technology, particularly video games, biotech and green energy, with relatively small size but big, scalable ideas and healthy, stable revenue.
"Our strength is in listing the small- to medium-sized growth companies, not only the larger ones," he said. "Stockholm is an alternative mainly for those smaller companies that are growing well but not exorbitantly.
"A company growing 100pc year on year probably is in a good place to stay in the private world, because they can access large amounts of money. They fit the VC (venture capital) model. In Europe the challenge is that so many good companies are growing 30 to 40pc year on year, and VC typically is not interested in those," he said.
Mr Kostyál, who also helps larger European companies list on Nasdaq in New York, said firms with revenues under $100m "are too small to list in the US - but in the Swedish market we list these companies every day. On the Irish stock exchange, you don't."