Companies pay less for an IPO or capital increase at Deutsche Borse than they do on any other European stock exchange says a study presented by Professors Christoph Kaserer and Dirk Schiereck. The comparative study shows that investors benefit from the low transaction costs resulting from the high level of liquidity offered by Deutsche Borse.
“The low capital costs and high liquidity make Frankfurt an attractive listing venue for both German and international companies”, says Rainer Riess, who is responsible for Deutsche Borse’s cash market.
At 8.7 percent, the total cost of an IPO in Frankfurt is considerably lower than in London, where IPO costs are 11.7 percent. This cost advantage means that stock exchange newcomers face substantially lower capital costs when they opt for a listing in Frankfurt. The results of the study also confirm the high level of trading activity in Frankfurt: at €31 million, the average daily trading volume of each Prime Standard company is considerably higher than on London’s Main Market, where the average volume stands at €6.3 million. The volume on the Entry Standard is almost twice as high as on AIM.
The Entry Standard, which Deutsche Borse launched in October 2005, has since now firmly established itself as an alternative access to the capital market for small and medium-sized companies. The Entry Standard serves as an entry segment, because it offers companies fast and cost-efficient access with low legal requirements. The segment now lists 71 German and foreign companies, making it the largest alternative market in continental Europe. Three companies have already been promoted to the General and Prime Standard segments, meaning that they used the Entry Standard as a stepping stone to further development on the capital market.