The economics press tells us that we are lucky to have eight companies considering going public after more than two years of drought. Indeed, the last to go was Acciona Energía, in a successful 2021, as there were six companies in the process, although only two achieved it. I’m afraid nothing has changed to reverse this trend of few exits and many failures.

Roughly speaking, an IPO begins when a company begins to think about its convenience. There can be many reasons: obtaining financing for the company or liquidation of part of the shares, facilitating the change of generations in the case of a family business, etc. The first two are the most common, as an IPO is usually followed by, or rather preceded by, an offer for public subscription (OPS) in the case of company financing, or a sale (IPO) if shareholders are selling some of their shares. positions. Most IPOs require an IPO or OPS because going public requires a minimum shareholder dispersion.

Having made this preliminary decision, the company contacts an investment bank, which carries out an initial analysis to check the viability of the operation. If the result is positive, lawyers step in, always in close coordination with the investment bank, with the dual purpose of carrying out legislative changes in the composition of the board of directors required by the listed company and preparing the corresponding prospectus. This is a lengthy document that describes in detail the company and its activities (IPO or OPS) and includes a chapter on the risks borne by a potential investor. The prospectus must be approved and registered with the CNMV, which carefully analyzes it and, during the discussion phase, studies subsequent projects. Six 2021 candidates have already reached this stage, and it’s easy to imagine how time-consuming and expensive it can be.

The last stage is the sale itself, during which company directors and investment banks meet with potential investors, exclusively institutional ones, who have also been sent a draft prospectus, to answer their questions. Upon expression of interest, the price is closed, the prospectus is executed and registered, and purchase orders are accepted. All the latter happens in two or three days. There is an illegal or rather fictitious security for the operation, since it is closed when the order book is practically closed.

It is at the commercial stage that operations fail, either because they do not generate enough interest or because the price does not satisfy the company or sellers.

Where are our investment banks and securities firms that were so successful 25 years ago?

We’re not here to analyze the reasons why more companies don’t go public, but rather why so many who try fail. First, let’s look at which investment banks coordinate operations. The latest company to declare an interest, Astara Mobility, part of the Bergé group, appears to be led by Morgan Stanley, BNP and HSBC. Of the remaining seven transactions, in addition to Morgan Stanley and BNP, we read Goldman Sachs, JP Morgan, Citi, Barclays, Rothschild and Santander. The latter is simply shocking: it is the only Spanish name that timidly appears on the list. As for the commercial phase of the IPO or OPS, the names of the acquirers are not disclosed; Now it seems like the list is short and always the same. In addition, very few large international managers have leadership and driving roles, so unless they show interest, no one else will dare enter the operation. And this is true whether we are talking about transactions worth billions of euros or several hundred million.

The main reason for the failure is that there is no local market for these operations, even small ones. Spain is a peripheral country with an even smaller stock market, the weight of which in global capitalization is practically insignificant. It is logical to assume that these medium-sized companies are known at the national level, and therefore arouse only natural interest in our country. Where are our investment banks and securities firms that were so successful 25 years ago? They disappeared, acquired mostly by foreign entities and not replaced by local ones. Because? Because it has become a bad business.

And the personalities that were always in force when the retail segment existed (which almost always existed, until fifteen years ago)? This section no longer exists because investment banks do not have private clients, to the satisfaction of the regulator, which avoids complaints if the offering goes wrong, that is, when it begins to list at a lower price than the opening price. But isn’t it a contradiction that an IPO excludes individual investors? So what are you citing?

Finally, what about our institutional investors? Spanish investment funds invest only 17% in variable income and are also closely linked to an index to which the new listed company does not belong. There are actively managed funds that will be potential recipients of these allocations, but not in sufficient numbers.

We are faced with yet another case where regulatory changes and a certain supervisory orientation put an end to an industry that had produced such good results for the Spanish financial system. If they say that this is a European problem, then the example of Sweden refutes this.