For a long time, going public for Israeli companies meant NASDAQ. This has changed with the advent of many new stock exchanges in Europe. One such exchange - EASDAQ is becoming more and more popular for Israeli companies and today's Enable looks at the advantages of this exchange for Israeli companies.
Clive Pedder, The Executive Vice President of EASDAQ has contributed the following column to Enable.
For innovative growth companies in Israel, the European capital market represents a new land of opportunity. EASDAQ - the pan-European stock market - allows growth and technology companies with international ambitions to access capital from a broad international base of institutional and retail investors.
Established in 1996, EASDAQ was the first exchange to establish a genuinely pan-European infrastructure, complete with single rulebook, single language (English), single trading system, integrated cross-border clearing and settlement, and members from across Europe and Israel. EASDAQ believed that investors and borrowers had much to gain from forming as large as possible a pool of liquidity out of Europe's fast-growing but fragmented capital markets. Such a market would be very attractive to small, often high-tech, companies seeking to fuel their growth by coming to the market with IPOs.
Events have fully endorsed this vision as capital markets rapidly replace private investment and universal banking as the most important source of finance for growing companies. Most national exchanges now boast IPO markets such the Neuer Markt in Germany or the Nouveau March? in France, and a multitude of initiatives emulating this concept are in varying stages of development, ranging from alliances of national exchanges to wholly new trading networks. Despite this burst of activity, EASDAQ remains the only truly pan-European market. Its independence from national interests and its flexibility have allowed it to capitalise on its most powerful asset - a completely integrated pan-European market infrastructure - to offer a broad range of international stocks on a single, easily accessible platform.
EASDAQ's latest initiative was the launch of its dual trading facility, designed to offer investors the opportunity to take advantage of EASDAQ's unique infrastructure to trade a range of exciting stocks from other markets, during normal European trading hours (10:00 to 18:00 Tel Aviv time). The trading of these stocks takes place alongside traditional EASDAQ IPOs and secondary offerings, within a fully regulated market environment. The facility was launched in January 2000 with a selection of top Nasdaq names including Microsoft, Yahoo! and Intel, and now features 19 stocks, including some of the most popular Nasdaq-listed Israeli companies: Check Point Software Technologies, Galileo Technology Limited and Orckit Communications Limited. Additional stocks from Europe, the US and Israel will be added progressively.
Benefits of an EASDAQ listing
Israeli companies listing on EASDAQ benefit from an immediate presence in Europe, where they gain access to a wide membership network of investment banks, brokers and market makers - enabling them to place financial instruments across Europe, diversify their sources of funding and/or build new prospects for future funding requirements. In addition, their visibility among hundreds of growth companies in Europe is likely to be greater than their visibility among the thousands in the United States; their visibility is further enhanced by being listed alongside the other successful - if bigger and better-known - companies that are listed and traded on EASDAQ.
Issuers also benefit from a sector-based approach which minimises national distinctions and allows for effective global peer group analysis and research coverage; inclusion in the EASI index; international reporting and media coverage through key information services and media outlets; and web presence on the EASDAQ website.
Should a company wish to reach both the North American and European investment communities, the fact that EASDAQ was modeled on Nasdaq and has nearly identical admissions and reporting requirements allows them to do so in a streamlined and cost efficient manner. Companies listing on both markets benefit from a wider investor base, extended trading hours (10:00 to 23:00 Tel Aviv time for Nasdaq-listed companies), additional research reports, and increased overall liquidity.
Companies already listed on any recognised exchange in Europe, North America or Israel may take advantage of EASDAQ's streamlined dual listing procedures, which allow such companies to take an additional listing on EASDAQ free of charge and without having to prepare a new prospectus, provided that they are not raising any capital at the time.
Growing popularity among investors
A growing investor awareness of EASDAQ and its companies has driven a sharp increase in the volume and value of transactions on the market. January and February were record-breaking months for EASDAQ, with its EASDAQ All Share Index (EASI) hitting new highs against a backdrop of unprecedent trading volumes. This trend has continued into March, promising a record-breaking first quarter. Given the recent liberalisation in Israel's currency, investment and savings regulations, Israeli private investors wishing to buy or sell shares on EASDAQ may do so without restriction. Exemption from capital gains tax is granted to Israeli stocks traded on EASDAQ, provided that they fall into the categories defined for such purposes.
EASDAQ is constantly working to facilitate investor access to the market. Investors should be able to connect to the market as speedily, reliably and cheaply as possible. Cost is especially important as technology and competition, influencing each other, depress the price of information. From the middle of this year, therefore, EASDAQ will be phasing in a wholly electronic trading system that uses the Internet as its backbone. EASDAQ will be Europe's first Internet exchange, exploiting to the full all the advantages of the extraordinary technological revolution we are living through.
Investors also require the best possible information. EASDAQ's website, www.easdaq.com, provides the most comprehensive information available on EASDAQ and its companies. Investors are able to get near-time prices (with a 15-minute delay), up-to-the-minute market and company news, current and historic charts and graphs, downloadable closing prices, and information about listed and traded companies as well as members, brokers, and the market as a whole. The quick-loading home page allows users to check EASI index performance, the 10 most active EASDAQ stocks and the latest market and company news headlines at a glance. The site is intended to grow into the main channel of communication between the market, its participants, and the general public, and has been designed to grow with the increasing functionality of the Internet over the coming years.
For Israeli companies seeking to broaden their horizons, EASDAQ provides access to a wide range of institutional and private investors within a liquid, efficient and transparent market. For investors seeking new opportunities, EASDAQ provides one-stop access to a range of exciting international technology stocks with high growth potential. While other exchanges promise future developments, EASDAQ is already delivering the future: a single pan-European market for international stocks.
[My special thanks to Clive Pedder for contributing to Enable. - MN]
Published by Israel's Business Arena on April 11, 2000.