Spanish markets on track to draw highest listing in 25 years

Spain's stock market is on track to draw the highest number of new listings since 1989, in the latest sign of investor confidence in the country's economic recovery.

Bolsas y Mercados Espanoles (BME), the operator of the Madrid bourse and other domestic exchanges, says it has pushed through 11 initial public offerings in 2014. It expects at least six more before the end of the year, including the flotation of airport operator Aena, which bankers say is likely to be one the biggest listings in Europe this year.

Crucially, at least three of the additional listings expected in the months ahead are set to take place on Spain's MAB alternative market, suggesting that Madrid's junior bourse is bouncing back strongly from the scandal over the collapse of Gowex, its most high-profile listing to date.

"New companies are coming to the MAB. They want to be there," said Antonio Zoido, BME chairman and chief executive. "That is consistent with the idea that we need alternative and complementary ways of financing companies . . . We need that in particular in Spain, where there is excessive dependence on bank lending."

His comments came as the Spanish government unveiled a package of new measures to bolster investor confidence in the alternative market. Among other moves, the new law will force companies with a market value above €500m to move to the main market and imposes stricter requirements on the type of auditor that MAB-listed businesses can use.

BME officials highlight that none of the companies listed on the junior market have so far followed through on their threat to seek a listing elsewhere in the wake of the scandal - and that one new company has already been added to the exchange since the Gowex collapse.

Gowex came under fierce pressure from US short-sellers in July this year, amid accusations that the Spanish wifi provider had massively overstated its revenues. The company founder eventually confirmed the accusations, triggering the bankruptcy of the company. The scandal raised fresh concerns over the quality of regulatory oversight in Spain and prompted speculation that Madrid's alternative MAB market would see a potentially devastating exodus of listings.

Three months on, that scenario has not come to pass, providing a fresh boost to an exchange that has emerged as an obvious beneficiary of Spain's recent economic recovery. Trading volumes, new listings and revenues have all risen sharply compared with recent years - thanks mostly to a flood of new investment from abroad. International investors typically account for at least 80 per cent of trading in Madrid, Mr Zoido said.

"We feel the recovery. Since October last year, we have seen that there is rising attention and attraction. The increase in volumes is very clear and compares enormously well to other European countries," he said. The BME chairman added that trading volumes at the Spanish bourse were now "very often at record levels".

In September, trading volumes on the BME were 29 per cent ahead of last year, with trading in exchange traded funds rising particularly sharply. The group's first-half profits also showed signs of recovery, with net earnings rising 16 per cent to €84m.

BME's share price, however, continues to languish below mid-year highs, reflecting at least in part the sell-off that took place in response to the Gowex scandal. Mr Zoido declined to comment on the case itself, which is currently under legal investigation, but launched a vigorous defence of Spain's broader regulatory environment, including on the MAB.

"We obviously think that the regulation [of MAB] is just as good as on Aim and Alternext [the alternative markets in London and Paris]. Frankly, they are almost copies of one another," Mr Zoido said. Spanish companies, he argued, had in any case made great strides towards improving their corporate governance in recent years.

"I think Spain has improved enormously in this area. Many of our companies have a very high international standing and I don't think they would have reached that situation if they didn't have a good level of corporate governance," he said.

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