This article first appeared on Equities.com and was written by Daniel Banas.
It’s been a wild year for small-cap companies in both the US and Europe. A depressed economic environment in much of Europe, as well as the turmoil of Brexit have made potential investors increasingly skittish. The IPO front has been sluggish in the US as well. This is all perhaps in part due to a wild election cycle and our own weak growth environment. Simply put, these days, small-cap entrepreneurs on both sides of the pond need all the help they can get, which is precisely the thinking behind Monaco Growth Forums, a conference highlighting growth companies seeking capital, or simply exposure.
“About a year and a half ago, I saw the need for a small-cap growth company conference in Europe that was not necessarily sponsored by a major investment bank,” says Andreea Porcelli, Founder and CEO of Monaco Growth Forums. ”The purpose of that was to allow investors to freely interact with the CEOs of these companies, without having, let’s say, the sales pressure of a particular investment bank that was promoting their own products.”
What types of companies will you find at the conference? As you might imagine, “biotech and biomed are always very popular,” says Porcelli. However, recently, another sector is beginning to get serious traction as well. “Fintech is really popular right now in Europe,” Porcelli says. ”There are a lot of emerging fintech companies that are finding their way into the public markets.”
Seeking Safety in North America
While the event is invitation-only, that’s certainly not hindered Monaco Growth Forums from becoming very much an international affair. “The last forum, we had about 46 nationalities represented, and I think the CEOs were very happy with the type of rapport they were able to establish over the course of three days,” Porcelli says. “Past forums have seen a wide variety of types of institutional investors as well, including “a lot of family offices, a lot of ultra high net worth advisors, discretionary asset managers, and of course, public equity finance managers.”
However, despite the diversity of attendees, as of late, Porcelli states that investors have shown “much greater attention to North American companies, because, mainly, the emerging market scenario has become so cloudy for investors. Most are seeking safety, and they see the US and Canada as a place to obtain that.”
“Many of the overseas fund managers have specific mandates as to the geography of the companies that they invest in. So, by dual-listing in a home market where you have existing investors, or are actively seeking investors, you can qualify yourself as a domestic investment, although you may actually be based in the US, says Porcelli. “So, it’s really just a strategy for increasing your international shareholder base.”
Reason for Optimism in a Challenging Small Cap Climate
Despite the current economic emphasis on North America, this year has been an unusually tough one for small-cap companies, with remarkably few companies pursuing an IPO in 2016. However, Porcelli remains optimistic for the region, predicting “an avalanche in the new year” of companies seeking dual-listing in the US. “Definitely, the election weighed on this year’s activity,” Porcelli explains, “but I know that major European companies that are not already dual-listed, are actively seeking a role in the US, partly because of the turmoil that’s going on in their own market right now.”
So what companies should consider going public in today’s economic climate? “I think that if a company expects to be news intensive, they definitely should consider going public. That will only add to their valuation,” Porcelli advises. “Furthermore, I have found it’s very useful for companies that are perhaps trying to obtain large corporate contracts. It’s very easy to explain who you are to IBM (IBM) or Oracle (ORCL) if they can just look up your stock symbol.”
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