(Bloomberg) -- The European Union’s lending arm is working on plans to facilitate company listings across the bloc as part of efforts to bring down barriers to capital and boost competitiveness.
The European Investment Bank is looking at funding the costs for tech startups that want to launch initial public offerings on stock markets in the EU and it could act as a cornerstone investor in IPOs, a person familiar with the plans said.
The European multilateral bank presented the so-called exit platform proposal as it seeks to support the push for deeper integration of the region’s capital markets. This has become a priority for EU member states, which want to tap dormant capital and savings to finance an investment gap that could amount to €800 billion ($879 billion) annually, according to a recent report prepared by former European Central Bank President Mario Draghi.
“We’re talking about ensuring that European companies, technologies that are born in Europe, stay in Europe, and that we invest in Europe’s champions, in Europe’s unicorns, that we reinforce Europe’s competitiveness through a stronger capital market,” EIB President Nadia Calvino told reporters on her way into a meeting with EU finance chiefs in Luxembourg.
The plan, which could also see the EIB provide financing for the acquisition of innovative companies, was welcomed by the ministers on Monday. It’s now expected to be finalized by the bank’s board of directors and the European Commission, the EU’s executive arm.
New Instruments
The EIB was mandated last March by euro-area finance ministers to support progress on building a capital markets union through new instruments that would facilitate access to financing for small and medium-sized businesses.
The EU has seen a recovery in IPOs in recent months after rising interest rates and geopolitical uncertainty slowed down market activity in the last couple of years. EU IPOs have raised €10.23 billion so far this year amid higher stock prices buoyed by looser monetary policy, a 65% jump from a year ago but short of the boom days of 2021, according to data compiled by Bloomberg.
Recent successful share sales have generally come from more established companies rather than growth-focused tech firms, which have preferred to stay private until market conditions improve.
Some of these candidates could end up listing in the United States in search of deeper liquidity and higher valuations. Swedish buy-now-pay-later giant Klarna Bank AB has been preparing for a New York IPO next year, Bloomberg has reported. French oil major TotalEnergies SE is among more established firms considering a US listing.
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