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Euronext CEO rules out another Allfunds bid in acquisition hunt

Euronext ENX is unlikely to make another bid for Allfunds ALLFG as it pursues acquisitions that can grow and diversify revenues, its CEO Stephane Boujnah told Reuters.

The Paris-headquartered stock exchange group withdrew a 5.5 billion euro ($6 billion) bid for the Spain-based investment fund platform in February, after news of the possible offer sent Euronext's shares into a tailspin.

"Acquisitions will remain a significant part of the Euronext strategy, within certain strict criteria," former investment banker Boujnah said in an interview this week.

"The reasons why we decided not to do Allfunds remain. So, it's not on top of the agenda for 2024," he added.

Euronext's share price has recovered, but Allfunds' remains significantly lower.

This has prompted Allfunds to appoint advisers for a strategic review that could result in a sale to a private equity fund, sources familiar with the matter told Reuters.

Allfunds declined to comment.

Boujnah said Euronext – which operates bourses in Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris – would consider adding new exchanges in continental Europe, although he said there are few left to consolidate.

It will also explore acquisitions in adjacent sectors beyond Europe, having considered deals in Britain, the United States and some smaller transactions in Asia.

"We will definitely look at assets in those geographies," Boujnah, who has been Euronext CEO since 2015.

Boujnah declined to comment on a Reuters report in September that Euronext was considering bidding for U.S. securities lending platform EquiLend.

His update on Euronext's acquisition strategy come as stock exchange groups look for new revenue streams to reduce their reliance on more volatile listing and trading income.

Reuters Graphics
Thomson ReutersYear-To-Date Global ECM Volumes 2013-2023 (USD bln)

Global initial public offerings (IPOs) have had their worst year since 2016 so far in 2023, Dealogic data shows, as rising interest rates and economic uncertainty shook markets.

However, Euronext said it is set to finish the year with 64 new listings, adding close to 50 billion euros in aggregate market capitalisation. These include the dual listings of Spanish transport giant Ferrovial FER in Amsterdam and U.S.-based fashion group Coty COTY.

Last year, the group reported 83 listings with a combined market value of 23 billion euros.

"(International IPOs) don't go to London anymore, they go to Euronext markets," he said.

Asked about the risk of European firms moving their listings to the U.S. in search of higher valuations or deeper liquidity, Boujnah said the threat was bigger for the London Stock Exchange Group LSEG.

"New York is a problem for London, not for Europe," he said.

"The main tension and the main problem of the attractiveness of New York has been for UK-based companies so far. For the moment, I don't see a risk of large European-based (firms) considering the same move."

The British capital is seeing a string of large firms shift their listings across the Atlantic, including construction materials group CRH and packaging firm Smurfit Kappa, as well as others pursuing IPOs abroad, such as chipmaker Arm Holdings.

The UK is working to attract more IPOs by easing listing rules and encouraging investment into local start-ups. This week Britain's markets watchdog proposed a single entry point to simplify and speed up company listings, in the biggest shake up of its kind in three decades.

Continental Europe has not been immune, however. German sandal maker Birkenstock debuted on the New York Stock Exchange in October, while Ferrovial also wants a U.S. listing.

The European Union has work to do to make its capital markets more competitive, including establishing a single markets watchdog akin to the U.S. Securities and Exchange Commission (SEC), said Boujnah.

"We need to proceed to a system of single supervision," he said. "There is a case and there is a momentum that is going in the right direction towards the emergence of a European SEC."

ECB President Christine Lagarde called for a European SEC and a consolidated capital market in a speech last month as a way to unlock financing for the bloc.

($1 = 0.9137 euros)

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