Benoît van den Hove, CEO and Chairman Euronext Brussels: ‘There are a lot of companies ready to go public’

In a conversation between MandA and Benoît van den Hove, CEO and Chairman of Euronext Brussels, the recent developments and performance of Euronext Brussels are discussed as well as Benoît’s vision on the current stock market year, the climate for IPOs and the sustainability of the financial world.

It was a turbulent year to take over as CEO of a stock exchange company. Benoît van den Hove stepped into Vincent Van Dessel’s shoes as CEO of Euronext Brussels in July 2023. In a conversation with MandA.be, he illustrates the challenging circumstances facing the capital markets. “The capital markets are highly dependent on macroeconomic and geopolitical conditions. A bit like the M&A market. That is why there are many similarities between the two”, says Van den Hove.

He points out, among other things, the influence of inflation and interest rates on the valuation of listed companies, and emphasizes the impact on the number of listed IPOs in Europe. “In 2021 there were 212 IPOs on Euronext’s seven markets (Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris, ed.), but this number fell to 83 in 2022 and to 64 last year, about 40% of all listings in Europe. But what we have also seen is that companies have still eagerly turned to the capital market to raise money. Over the entire year of 2023, 3.2 billion euros in equity was raised in Belgium, higher than the average of the last six years, so companies have still been able to call on the capital market to finance themselves.”

The return of the IPOs
Van den Hove also shares his expectations for 2024, where the level of inflation and interest rates will have a major influence. “If inflation falls, interest rates will fall, which should have a positive impact on the capital markets”, he says. Regarding the current tense geopolitical situation, he notes: “If things do not flare up further on the geopolitical front this year, we are optimistic about the expectations for this year.”

In 2024, September 4 will be an important date for the Brussels stock exchange due to the release of 22 billion euros from the government bond of the Minister of Finance Van Peteghem. This amount will be available for investments in the real economy, with a focus on sustainability and support for companies involved in the transition to sustainable practices. “That is a date that all bankers and asset managers must write in red in their diaries”, says Van den Hove. The CEO of Euronext sees that if you offer a good interest rate and a good investment story, private and professional investors are still ready to jump on it. In addition to the 2023 government bond, you also had large retail associations that managed to attract private investors en masse. “We had Colruyt in February, we had Fluvius in June and in November we had UCB. The three of these unions have raised almost 800 million euros.”

In short, a positive sound from the Brussels stock exchange CEO, who also expects the IPO to slowly wake up from its hibernation. “There are a lot of companies ready to go public. This will probably start in the US and Europe with a number of very strong players. They then encourage other companies to go public.” It is expected that companies will be more inclined to make this move in the first half of the year or shortly after the summer, given the unpredictability that the US elections can bring.”

The backbone of the European capital markets
What struck Benoît van den Hove in his first period as CEO is how unknown the story of Euronext still is. “There is actually a lot of talk about delistings in the press, for example, but people are less familiar with the real story behind Euronext”, says the CEO. This story starts with the merger of the Paris and Amsterdam stock exchanges in September 2000 with the aim of creating a European Capital Market Union and strengthening the European ideas. Followed by the acquisition of the Lisbon Stock Exchange in 2002. After a period of ownership of the New York Stock Exchange, Euronext became independent again ten years ago, in 2014, thanks to its own IPO and expanded with three more acquisitions (the exchanges of Dublin, Oslo and Milan respectively). Van den Hove: “If you now look at Euronext and the companies listed on it, we have 6.6 trillion euros*1 in total market capitalization. That is twice more than London and three times more than Deutsche Börse. Sometimes people ask for a European Nasdaq, but that is actually already there with the single pool of liquidity that we have created and given the more than 700 Tech companies listed on our markets.”

What further contributes to this unification of the European stock exchange is the large-scale ICT integration that is continuously taking place. Becoming the hub of the Capital Markets Union that the European Commission envisions all starts with technology. Euronext sees itself not only as a stock exchange operator, but also as a high-tech company. Their proprietary platform, called Optiq®, one of the fastest trading platforms in the world, is the backbone of their operations. Every local market that becomes part of the Euronext group will be connected to this trading platform. This platform enables trading in a uniform and efficient manner, taking into account specific trading methods of local markets. In this way, local economies are connected to the global capital market.

But Euronext is now more than just a trading platform. The European stock exchange operator recently carried out a large-scale IT project to bring its clearing activities in-house. Previously this was carried out by a subsidiary of a competitor, but this changed with the takeover of Borsa Italiana in Milan. By expanding its business activities across the entire value chain, Euronext has more control and can work more efficiently.

Supporting the market leaders of today and tomorrow
In addition to technological innovation, Euronext is also rolling out programs to support listed companies or companies that may be considering an IPO in the coming years. “We have created a segment specifically for listed tech companies that we call Euronext Tech Leaders”, Benoît explains. “In Belgium you have a number of real tech world players, such as Umicore, Barco, Melexis and EVS. We try to guide those companies as best as possible with, among other things, conferences, specific access to investors, coaching of the younger generation by more experienced CEOs, and offering a community of like-minded people. Ultimately, these companies are an engine of growth, prosperity and job creation in both Europe and Belgium, and that is why we really want to support those companies. Another initiative is IPOready, an educational program for ambitious European companies. This program provides insight into the so-called ‘IPO journey’: pre-IPO financing, post-listing obligations and the prospectus and book building process. Experts, advisors and practitioners, i.e. CEOs or CFOs who have previously experienced an IPO, share their knowledge, giving companies a better understanding of what is required for a listing and how to prepare for it, such as the required transition to IFRS accounting.”

Are there any plans to further expand the number of seven fairs? Van den Hove smiles: “Euronext has always looked at opportunities in the M&A market, and Euronext will always continue to do so. I think we have very clear achievements that show where we want to go. And if there are opportunities, we at Euronext will of course examine them thoroughly.”

The biggest revolution ever in the financial sector
When speaking about the future of Euronext, one topic is predominant and that is the transition to a sustainable economy. This theme affects Euronext in various ways, for example in the form of increasingly stringent regulations, such as CSRD. “We are a company ourselves and we are also listed, so we are also subject to the same dynamics as our customers”, says Van den Hove.

Sustainability also has a major influence on the products traded on the stock exchange. “Certainly in the field of bonds, we see a shift from conventional finance to more sustainable finance”, he says. “Last year we listed almost 32 billion in bonds on Euronext Brussels, of which 7.7 billion were for green, sustainable, social bonds. That is something that will certainly continue to grow in the coming years. The appetite among investors for such products is therefore great.”

Euronext is responding to this need with the introduction of the BEL® ESG Index in addition to the well-known BEL 20. “This index is designed to – in addition to classic financial criteria – also add environmental, social and governance (ESG) risks to the selection of the 20 companies”, explains the CEO of the Brussels stock exchange. “The new index has had a huge response among companies. Every company today is trying to make itself more sustainable. It is imposed by regulations, but on the other hand, companies also understand that if they want to recruit the talents of tomorrow, if they want to have partnerships with leading market parties or if they want to continue to retain customers, they must also work on sustainability. And when the index was launched in February last year, almost all companies were represented, either by their CEO or the chairman of the board. So we see this creating positive momentum among companies.”

The future of the financial markets in Belgium is strongly determined by such developments, sees the CEO of Euronext Brussels. “The arrival of CSRD really means learning a new language”, he notes. “A bit like decades ago with the arrival of IFRS. But CSRD goes much further, because it requires monitoring a large number of KPIs that were previously not monitored in a structural manner. I think this will have a very big impact on the entire business community and the financial markets in particular. Today we are still very dependent on ESG rating agencies. In the coming years, much more data and information will be available in annual reports, which will also help investors to bring more sustainability to their funds. I see the sustainability of the financial world continuing to evolve in the coming years in a way that no company or investor can ignore.”

*1) Based on figures at the end of December 2023