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Amsterdam vies for IPO spotlight as Brexit dents London’s allure

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The decision by Polish ecommerce group InPost to pick Amsterdam for its stock listing offers the latest sign that London risks losing its grip as a trading hub after Brexit.

UK chancellor Rishi Sunak has referred to the hard break from the EU in financial services that kicked in on January 1 as “Big Bang 2.0″, a trigger for the City of London to flourish.

But bankers say Amsterdam is already showing potential to eat in to London’s pre-eminence as a European capital markets centre. Trading in EU shares fled London for EU centres including the Dutch city on the first day outside the single market at the start of 2021. Wednesday’s announcement by the Advent-backed parcel locker business suggests that initial public offerings may also gravitate towards where trading in European stocks is more lively.

“Looking at the options and the stock markets, Amsterdam looks very attractive because it seems that now that Euronext Amsterdam is becoming a kind of preferred tech companies listing stock exchange,” said Rafał Brzoska, InPost chief executive.

“Where in the past London was the default, we could see Amsterdam emerging as a new neutral listing place for IPOs, certainly for central and eastern European countries,” added Andreas Bernstorff, head of European equity capital markets at BNP Paribas, which advised on the InPost deal. “That is something that’s been accelerated by Brexit but also regulatory advantages in Amsterdam compared to London. We see that theme continuing.”

Euronext Amsterdam — part of a group of exchanges across the continent — handled just two IPOs last year, far behind London’s tally of 36, including dual listings, Dealogic data show. But one of the Dutch deals, for coffee conglomerate JDE Peet’s, was the biggest European listing last year and at €2.3bn, the largest since 2018. The lockdown-era deal in May was the first €1bn-plus listing executed virtually, with the roadshow taking just three days, down from a typical 14. Around 90 per cent of investment in the deal came from outside the Netherlands.

That flexibility and international reach for a large deal has provided evidence that the Dutch financial centre can absorb transactions that might otherwise have headed for London.

René van Vlerken, head of listings at Euronext Amsterdam, said his focus is on attracting listings and liquidity to the whole Euronext network, which spans countries including France, Portugal and Belgium, rather than only to the Netherlands.

“I’m not so much concerned about where the centre of the [European] capital markets union will be. I don’t care. I’m mostly concerned that the whole of Euronext can facilitate that,” he said.

London’s longstanding dominance of European finance is far from over even as it is being challenged, analysts have said.

“LSE remains the most international exchange for equity and bond issuers, traders and investors, and continues to be the financial centre of choice for issuance and trading within the pan-European timezone,” a spokesperson for the London Stock Exchange parent said. It is also urging the government to revamp listings rules to make the city a more attractive venue for fast-growing companies.

But for companies looking outside the UK, bankers think Amsterdam could have an edge over other European centres. “Choosing Paris or Frankfurt is more of a statement,” said one banker familiar with the InPost deal. Marginal differences in listing and governance rules in Europe tip in Amsterdam’s favour, he added.

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Mr van Vlerken is pushing the case for Amsterdam “very loudly”, he said, noting that companies had started to look beyond London before Brexit was completed. “We talk to issuers from Israel and from Africa that in the past, if they were going to do a listing in Europe, they would automatically go to London. There was a tradition and a history there. But that is already shifting,” he said.

“More and more companies from outside Europe looking at a listing are seriously considering Euronext as an alternative to London.”

London’s financial sector is effectively operating under a no-deal Brexit after the UK and EU failed to reach a deal on so-called equivalence, or mutual recognition on standards and regulation, before the UK dropped out of the single market and customs union at the end of 2020. That outcome had been anticipated by financial institutions on both sides, so it has not generated a large amount of disruption. It has, however, sucked EU share trading away from London overnight, in a reminder of how rapidly established trading norms can change.

For shares in dual-listed Just Eat, for instance, around 66 per cent of regulated trading headed to Amsterdam last year. That figure has already climbed above 80 per cent. That shift in liquidity helps to draw in new listings, said Mr van Vlerken.

Also on Wednesday, Just Eat said it had halted plans to delist from the Netherlands and focus on the UK. The company is reviewing all its listings as US rules demand the company is also traded on an American exchange following its $7.3bn purchase of Grubhub last year. Overshadowing its decision is a review by index compiler FTSE Russell, which may mean Just Eat is removed from the UK’s FTSE 100.

Mr van Vlerken believes any boost to the Netherlands owing to a lack of equivalence will prove fleeting. “Advisers and issuers are asking me about the lack of equivalence but I prefer to rely on our own strengths. The mutual benefits are too great for London to cut itself loose for the long term. In the end there will be some kind of resolution.”

The UK, however, has already shown it is willing to carve out its own path in financial services, splitting away from EU practices and rules. It is planning to bring trading in Swiss stocks back to London, in a break with an EU ban that prevailed before January’s full break with the bloc.

Additional reporting by Tim Bradshaw



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Deliveroo: taste test

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Much depends for the London-based company on whether enthusiasm for home deliveries formed during the pandemic wanes



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Instacart valued at $39bn in funding round ahead of IPO

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Grocery delivery app Instacart has raised $265m from its existing investors, doubling the company’s valuation following the pandemic boom in demand.

Instacart, the US market leader in the grocery app sector, said the round valued the company at $39bn, up from $17.8bn at the time of its previous fundraise, which closed in November last year.

The company said it intended to use the money to increase its corporate headcount by about 50 per cent this year, a hiring spree that would be spread across the business.

The cash injection comes as the company lays the groundwork for a long-anticipated initial public offering. In January, it announced it had hired Goldman Sachs banker Nick Giovanni as its new chief financial officer. Giovanni had previously been involved in IPOs from Airbnb and Twitter.

“This past year ushered in a new normal, changing the way people shop for groceries and goods,” Giovanni said in a statement announcing the latest round.

“While grocery is the world’s largest retail category, with annual spend of $1.3tn in North America alone, it’s still in the early stages of its digital transformation.”

The company declined to comment on its timetable for going public.

Last week, Instacart added its first independent board members — Facebook executive Fidji Simo, and Barry McCarthy, a former finance chief of streaming platforms Spotify and Netflix.

Notably, McCarthy was the architect of Spotify’s 2018 direct listing, a process by which a company goes public without creating any new shares.

Over the past year, Instacart has been a key beneficiary of lockdown conditions, with many physical retailers restricting walk-in access to stores.

To accommodate the demand, Instacart’s gig workforce has swollen to more than 500,000 across the country. Over the course of 2020, the company said it added more than 200 retailers and 15,000 additional locations to its app.

However, the company faces growing competition from other delivery apps — such as Uber — and other online grocery offerings from retailers such as Walmart and Amazon.

And, as pandemic conditions subside, interest in online grocery shopping may tail off, suggested Neil Saunders, a GlobalData analyst. He also warned that Instacart is at risk of being forced out by grocery stores once they have their own ecommerce strategies more firmly in place.

“Paradoxically, the drive online has actually made retailers a lot more interested in investing in their own systems,” Saunders said. “If retailers decide to go it alone, it leaves Instacart out in the cold.”

The company said it would use the latest funding to increase its investment in its fledgling advertising business, as well as Instacart Enterprise, its “white label” service for companies that want to use Instacart’s logistics with their own branding.

The round was led by Andreessen Horowitz, Sequoia Capital, D1 Capital, Fidelity, and T Rowe Price.



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UK listing rules set for overhaul in dash to catch Spacs wave

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A Treasury-backed review of the City has called for an overhaul of company listing rules so London can better compete against rivals in New York and Europe and grab a share of the booming market for special purchase acquisition vehicles.

The review, to be published on Wednesday, also proposes allowing dual-class shares to give founders greater control of their businesses and attract a wave of tech companies to the London market.

The City’s attractiveness has stumbled in recent years as the US and Hong Kong have swept up the majority of in-demand tech listings. New York’s markets have been further swelled this year by a surge of so-called Spacs, which raise money from investors and list on a stock market, then look for an acquisition target to take public. Britain’s edge also has been eroded by a loss of trading businesses to European rivals since Brexit.

Rishi Sunak, chancellor, who commissioned the independent report, said the government was determined to enhance the UK’s reputation after leaving the EU, “making sure we continue to lead the world in providing open, dynamic capital markets for existing and innovative companies alike”.

The review, which was carried out by Lord Jonathan Hill, former EU financial services commissioner, has recommended a wide range of reforms to loosen rules that have tightly governed listings in the UK.

Lord Hill has recommended lowering the limit on the free float of shares in public hands to 15 per cent — meaning founders need to sell fewer shares to list — and wants to “empower retail investors” by helping them participate in capital raisings. 

He has also proposed a “complete rethink” of company prospectuses to cut regulation and encourage capital raising, and suggested rebranding the LSE’s standard listing segment to increase its appeal. The chancellor should also produce an annual “State of the City” report.

The government said it would examine the recommendations — many of which require consultations by the Financial Conduct Authority.

Lord Hill also recommended that the FCA be charged with maintaining the UK’s attractiveness as a place to do business as a regulatory objective. 

The FCA said it aimed to publish a consultation paper by the summer, with new rules expected by late 2021. 

Lord Hill said the proposals were designed to “encourage investment in UK businesses [and] support the development of innovative growth sectors such as tech and life sciences”.

He said the UK should use its post-Brexit ability to set its own rules “to move faster, more flexibly and in a more targeted way”, in particular for growth sectors such as fintech and green finance.

However, the recommendations will cause concern among some institutional investors which have argued that loosening rules around dual-class shares, for example, will risk lowering corporate governance standards. 

The review said London needed to maintain high standards of governance, with various ways recommended to mitigate risk. On dual shares, for example, it recommended safeguards such as a five-year limit.

Amid fears that the government could go too far with a drive for deregulation, Lord Hill said his proposals were “not about opening a gap between us and other global centres by proposing radical new departures to try to seize a competitive advantage . . . they are about closing a gap which has already opened up”.

Other recommendations include making it easier for companies to provide forward-looking guidance when raising capital by amending the liability regime, and improving the efficiency of the listing process. 

The inclusion of a recommendation to help Spacs list in London by no longer suspending shares after a target is picked will be welcomed by many investors.

However, the rapid growth of such vehicles loaded with billions of dollars in speculative cash has also raised concerns about a bubble forming in the market.

Lord Hill said there was a risk that the UK was losing out on “homegrown and strategically significant companies coming to market in London” from overseas Spacs.

The UK has lagged behind New York and Hong Kong in attracting the types of companies from sectors, such as technology and life sciences, that dominate modern economies and attract investors seeking growth stocks. 

London accounted for only 5 per cent of IPOs globally over the past five years, while the number of listed companies in the UK has fallen by about 40 per cent since 2008. The review also pointed out the most significant companies listed in London were either financial or representative of the “old economy” rather than the “companies of the future”. 

Lord Hill referred to the flow of post-Brexit business to Amsterdam to make the point that the UK faced “stiff competition as a financial centre not just from the US and Asia, but from elsewhere in Europe”.

The steps represent a win for the London Stock Exchange Group, whose chief executive David Schwimmer has called for a more competitive listing regime. He said it was possible to strike a balance between being competitive and maintaining high corporate governance standards.



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