Why has Nasdaq Helsinki seen a dramatic increase in IPOs?
An unusually large number of new companies were listed on Nasdaq Helsinki in 2015 (12) and in the first months of 2016 (7 so far). With such a strong healthy start for IPOs in Finland, it is expected that Nasdaq Helsinki will see another record year for IPOs in 2016.
This has many wondering, what made the Helsinki Stock Exchange such an attractive and vibrant market place after previously slow years? Who are these companies and why have they decided to list now? And why is it important for Finland?
Who are these Companies?
The newcomers of 2015 and 2016 have one thing in common – they are eager to grow. They have new concepts and they require new capital to execute on their ambitions. Two of the latest this year specialize in something as traditional as the construction industry, but with fresh ideas and new business models.
Suomen Hoivatilat (listed on First North) first builds, and then leases care facilities to public and private companies – a quickly growing business these days. Lehto Group (listed on the Main Market) builds apartments, houses etc. on a factory floor and then transports them to the building site, assembling them in a couple of hours or days like Lego blocks.
Another high-profile example is the Tokmanni Group (listed on the Main Market). They are the only nationwide general discount retailer in Finland, a very well-known household brand, and certainly the only one of its kind on Nasdaq Helsinki.
Other recent IPOs include: Siili Solutions (ICT) and Taaleri (Financials), previously listed on the less regulated Nasdaq First North Finland market place, having been listed in 2012 and 2013 respectively. Now these two companies have transferred over to the Main Market. They have demonstrated that the dynamics of the First North market works in Finland – it is truly a stepping stone to the Main Market. These new growth companies with clear and focused ambitions have meant a dramatic change for the Stock Exchange in Helsinki.
A Quick History Lesson: Reasons for the Turnaround – Financial Crisis, Sentiment Change and Hard Work
After the financial crisis, the number of annual listings was down to zero or close to zero for several years -- 2008–2011. The tide started to turn in 2012, and 2015 with 12 new companies. This was the best year after the 2000 internet listing boom. This year could be even better.
As always, there are a number of reasons for this kind of a structural change. Here are a few factors:
- Tighter Rules for Bank Financing -- One reason is that bank financing has become more difficult to come by as a consequence of tightening balance sheet requirements. As well, the exceptional interest rate situation has raised investor focus towards equity investments for greater investment return.
- Corporate Spin-offs -- As innovation and sector disruption have taken place various industrial giants like Nokia have undergone dramatic changes that have resulted in spin-offs, new entrepreneurs focused on mobile applications and new SME businesses.
- Start-up Fever -- Finally, Finland has witnessed a wave of start-up fever. This has been fueled by media stories, the creation of entrepreneurs and companies with a status typically held by celebrities– Also,events like Slush, which is the leading start-up summit in Europe.
Read also Part 2 of the story: "Nasdaq Helsinki's IPO Ground Work."
The text was originally published by Nasdaq Inc. (http://business.nasdaq.com/marketinsite/2016/Why-Has-Nasdaq-Helsinki-Seen-a-Dramatic-Increase-in-IPOs.html)