Downmarket Chic – French dot-coms going public – Brief Article
FRENCH DOT-COMS LOCK TO THE UNREGULATED STOCK EXCHANGE IN SEARCH OF CASH.
Multimillion-dollar Internet IPOs may be a distant memory, but that’s not stopping French dot-coms from going public. Unlikely to find success on the Nouveau Marche, France’s version of the Nasdaq, bullish Internet companies are heading downmarket to the Marche Libre, an over-the-counter exchange similar to the OTC Bulletin Board and Pink Sheets in the United States.
In recent years, OTCs have sprouted up all over Europe, including Ofex in the U.K., which became a magnet for dot-coms unable to meet requirements for the regulated markets. Marche Libre members don’t have to report earnings on a quarterly basis, nor do they face restrictions on the size of their offerings. That means they can conceal poor operating results. Shares are not traded on a real-time basis but are bought and sold once a day by “market maker” brokers. This makes the stocks less liquid and their prices easier to manipulate.
This year, a dozen tech firms have gone public on the Marche Libre, compared with only three tech IPOs on the Nouveau Marche.
Electronics retailer Nomatica, online-hiking site MaBallade.com and real estate site Adomos have all posted positive gains after their IPOs on the Marche Libre. Last week, News Bourse, a financial information Internet site and newspaper, floated 138,000 shares (25.09 percent of its equity) at 11 euros each, giving it a market capitalization of around $5.3 million.
“We weren’t old enough or big enough to list on the Nouveau Marche,” says Frederic Cazenaze, a journalist at News Bourse. “Plus, when you look at the state of the Nouveau Marche right now, it’s not all that appealing.” That’s because the tech heavy exchange’s value has fallen 60 percent this year.
Many U.S. firms go to the OTC Bulletin Board only after being delisted from the Nasdaq, but in France, an OTC listing is viewed as respectable. And for French tech companies, every little bit helps.
The Marche Libre also doesn’t have the same bottom-feeding stigma tainting other OTCs, and many small, family-run businesses choose the exchange to raise funds.
“It is more interesting for us to do an IPO than to raise money from VCs, who are very cautious at the moment, says Daniel Braun, managing director of Greativelane, a site for crafts hobbyists that plans to go public next month. But are these newcomers good investments? Brian Taylor, managing director of London based financial consultancy BTA Consulting, doesn’t think so. “You have to prove your business and have a proven track record of earnings before you go public,” he says. “I don’t see why the public should be enticed into something that’s not viable.”
That’s not stopping investors. Says Louis Thannberger, president of Europe Finance et Industrie, a financial services company that sponsors the majority of Marche Libre IPOs: “The regulated markets have caused widespread financial ruin, but people are still making money on the Marche Libre.”
Marche of Dimes
French oniine companies are turning to the Marche Libre exchange.
Here’s how some 2001 public offerings have fared.
Company Sector IP0 Price Price Aug. 2
Adomos Online real estate 5.48 euros 8.50 euros
MaBalladecom Online outdoors guide 5.20 37.43
MacpcPartners.fr Online retail 10 10.50
Nomatica Online retail 4 3.90
World Multimedia Web agency 2.59 1.49
Company % Change
World Multimedia -42%
Source: Marche Libre
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