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New SME-segment to facilitate access to growth capital for enterprises

Release date: 21 Nov 2016 | Deutsche Börse Cash Market

New SME-segment to facilitate access to growth capital for enterprises

Launch date set for 1 March 2017/Mandatory research reports and verification by Capital Market Partners, appointed by Deutsche Börse

On 1 March 2017, Deutsche Börse will launch a new exchange segment designed to enhance access to investors and growth capital for smaller and medium-sized enterprises (SMEs). As a segment of the exchange-regulated market, it will replace the Entry Standard for equities and corporate bonds. The General Standard and the Prime Standard will remain as Regulated Market segments.

Carsten Kengeter, CEO of Deutsche Börse AG, commented: "Financing growth is a core function of an exchange. The need for capital amongst small and medium-sized enterprises in Germany and Europe has grown significantly. Our new segment will connect these companies with investors, and will therefore facilitate the financing of growth." During his speech at the German Equity Forum, Kengeter invited the public to come up with suggestions for the name of the new segment. The winner of the competition is invited by the CEO to a home match of Eintracht Frankfurt.

The target group for the new segment encompasses companies which have already established their track record with investors. Admission requirements include a cooperation with a Deutsche Börse Capital Market Partner that will verify whether a company is suitable for inclusion into the new segment. This will include a legal and financial due diligence process.

Admission and post-admission duties will also comprise mandatory research reports, to be commissioned by Deutsche Börse, designed to improve liquidity and enhance visibility to investors. Furthermore, companies listed in the segment will be subject to the Market Abuse Regulation, and will therefore be obliged to publish ad-hoc disclosures; they will also be obliged to maintain insider lists, and publish managers‘ transactions.

As a next step in this development, Deutsche Börse plans to launch an index mirroring the segment's constituents.
Hauke Stars, Deutsche Börse AG’s Executive Board member responsible for Cash Market, Pre-IPO & Growth Financing, said: "The time is ripe for this new segment. Market participants have shown strong interest. With this move, we are leveraging experience gained with the Deutsche Börse Venture Network, which we launched last year. Moreover, our new segment is compatible with efforts on a European level to support SMEs via the Capital Markets Union." The EU Commission is currently considering the introduction of pan-European standards for a growth segment.

Deutsche Börse’s objective is to establish a working ecosystem for growth companies in Germany and Europe, which closely supports companies throughout all growth phases up to an IPO – hence, also generating more exchange listings. In this way, Deutsche Börse will also support the endeavours of the German Federal government to promote innovation and growth in Germany, thus contributing to the future competitiveness of the German economy.

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