FRANKFURT, Feb 19 (Reuters) - German stock market operator Deutsche Boerse is taking fresh steps to help start-up companies find potential investors, while stopping short of forming a full, entry-level market that could repeat the failures of the dot-com era.
After prodding by the federal government, the stock exchange operator said on Thursday it was exploring ways to expand the access of young technology companies to capital markets by creating a pre-market platform that can connect them with deep-pocketed investors.
Germany is home to some of the world’s most conservative investors, with polls consistently showing all but a small fraction shunning ownership of equities. Around 39 percent of investments are kept in savings and checking accounts.
Last week, the German Stock Institute (DAI) published data showing that only 13.1 percent of Germans invest in equities.
Economy Minister Sigmar Gabriel, the leader of the SPD, the left-of-centre party that is in the ruling coalition, has been pressing the Frankfurt exchange operator for months to set up a “Market Segment 2.0” to nurture young firms.
Deutsche Boerse has resisted this and says instead that it is planning to create the pre-market platform by the summer.
Deutsche Boerse Chief Executive Reto Francioni said the plan followed discussions with Gabriel. “We have spoken to him. Ultimately we want the same thing,” Francioni told a news conference on Thursday.
A second exchange official said further plans were being hammered out and should be announced in the near future.
The move comes several months after the successful, albeit volatile listing on the Frankfurt market of Europe’s largest Internet company, Rocket Internet — an ecommerce investor with stakes in more than 100 start-ups.
After a sharp fall on its first days of trading in early October, Rocket shares have recovered sharply and are now some 33 percent above their opening price.
The latest plan is designed to prevent any repeat of the failed ‘Neue Markt’, the country’s dot-com era answer to the Nasdaq. The ‘New Market’ was created in 1997 as a trading platform for small and midsized fast-growing companies.
At the peak of the so-called “dot-com” bubble in 2000, the Neue Markt’s top 229 companies had a stock market capitalisation of 234 billion euros ($266 billion). Many companies were newly formed with a record of only loss-making operations.
Following the bursting of that investment bubble in the years that followed, the market was hit by a string of financial scandals and bankruptcies. It closed in 2003, with surviving companies holding a total market value of just 30 billion euros. ($1 = 0.8791 euros) (Reporting by Andreas Kröner, Andreas Rinke, Harro ten Wolde, Hakan Ersen and Christoph Steitz; Writing by Eric Auchard; Editing by Crispian Balmer)