Brexit Fallout Is Driving U.K. Firms to Nasdaq's Nordic Market

Updated on
  • Expects 10-15% of 2018 listings to be made by non-Nordic firms
  • Uncertainty related to Brexit main driver behind development

The head of European listings at Nasdaq Inc. says Britain’s decision to leave the European Union is driving more U.K. companies to its Nordic market.

Nasdaq Nordic now expects up to 15 percent of its initial public offerings and listings in 2018 could be made by companies outside the region. Most of the approaches it’s getting are from U.K. companies, but there’s also interest from firms in Ireland, Israel, Malta and Germany, according to Adam Kostyal, who’s in charge of Nasdaq’s European listings.

“London is going through a very uncertain period, and uncertainty is a listing’s worst enemy,” Kostyal said in a Sept. 6 interview.

About 10-15 percent of Nasdaq Nordic’s pipeline is filled with companies based outside Sweden, Denmark and Finland. Kostyal says he’s now seeing enough international interest for that level to stick.

“More and more companies” that had looked to the London Stock Exchange’s AIM market for smaller, growing firms are now ready to “seek other options” after Brexit, Kostyal said. That includes Nasdaq Nordic’s First North offering for such firms, he said.

Nasdaq Stockholm and the London Stock Exchange have taken turns in topping rankings as the most active market in Europe for IPOs in recent quarters. Stockholm was the busiest European exchange in the second quarter with 34 IPOs versus London’s 24, according to PWC’s IPO Watch Europe report.

While the LSE declined to give specifics on companies weighing alternatives, it said AIM has been more active than First North Nordic if you include its Italian AIM market. It also noted that AIM has a higher average market and deal value than First North. Some 57 percent of the total equity capital raised across European growth markets in the first half of 2017 was on its AIM markets in London and Italy.

Nasdaq Nordic’s main attraction is Stockholm’s alternative marketplace, First North. It allows small companies to raise capital through an IPO without being subject to the stricter rules that apply on the main market.

What’s more, the British government’s decision last month to grant U.K. Growth Market status to Nasdaq First North is also helping. It was the first marketplace outside the U.K. and Ireland to get that status and it means British investors can get tax exemptions on investments in British companies listed on Nasdaq First North.

Taken together, all these developments mean that Nasdaq Nordic listings will in 2017 surpass last year’s level, Kostyal said. There’s “every potential” for a new record to be set, he said.

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