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'Beautiful period' for Chinese stock market

(China Daily)
Updated: 2008-09-04 10:57

Founded in 1988, France-based investment bank Europe Finance and Industry (EFI) has successfully helped 400 companies to list on Euronext, with total financing reaching a record 10 billion euros ($14.48 billion), which has not been matched by any investment bank in the world.

Famous in France as the founder of the second board and the No 1 underwriter for small and medium-sized companies (SMEs), Louis Thannberger, chairman of EFI, was recently awarded the Chivalric order, a top honor in France that was initiated by Napoleon in 1802.

In an interview with China Daily reporter Bi Xiaoning, the financial tycoon talked about his blueprint in China.

Q: In recent years, many overseas bourses have looked to China. What do you think are the main advantages of Euronext?

A: The main board, second board and free market are the three equity markets of NYSE Euronext and the free market is my favorite recommendation for SMEs. Firstly, there is no threshold on operating performance. With a three-year profit forecast, even new start-ups can get the go-ahead to list.

Secondly, time and money can be substantially saved as the procedures can be completed in two to six months, while it usually takes three to five years for a company to go public in China's A-share market. Even to list in Hong Kong and on the NASDAQ, it takes one to three years.

Thirdly, there is no lock-up period for shareholders' stock, which means stock can be sold for capital right after listing. Usually, the founders will hold 51 percent of shares to maintain a controlling status. It provides a more efficient way of financing, even more convenient than cooperating with private equity.

Q: Profit forecasts seem to be a key evaluation for IPOs, so how can you ensure they are real and not a mirage? And what kind of Chinese companies are you targeting as clients?

A: Exactly, the reputation of the investment bank will be damaged if the investors lose their profit. In the past 20 years, EFI's performance and public praise verifies its ability.

I have visited about 6,000 companies personally. We prefer to deal with companies in promising industries, such as bio-tech, energy and agriculture. Their annual growth rate is expected to be about 30 percent and their leaders should be ambitious entrepreneurs and strong-minded warriors.

Q: China is preparing to launch the OTC (over-the-counter) market and the second board. Do you think they will represent a big challenge for EFI to develop its business in China?

A: In China, there are 300,000 SMEs and about 28,000 can meet the requirement of listing on the second board. It's such a huge market and the competition is there, but not fierce. The biggest success of a capital market is to help companies grow up. For the companies, the more choices, the better. As far as I'm concerned, OTC can just offer a market to sell or buy assets and equity, but it's not ideal in terms of access for financing.

Q: Since the global stock markets are all experiencing a sluggish time, do you think it's wise to encourage Chinese SMEs to launch offshore IPOs now?

A: In my opinion, the downturn of the capital market is the most beautiful period, with many opportunities. The Olympic Games and World Expo Shanghai 2010 will put China feature into the spotlight and draw more foreign investors. In the long run, I believe that the Chinese stock market and the global capital market will witness an upward trend, so it's wise to take action now.

Q: EFI entered China in 2007. How is the business going?

A: So far, EFI has helped six Chinese companies list on Euronext and five more are likely to go public by year's end or the beginning of next year. We have a heavy schedule, but quite enjoy it.

EFI tries to meet the requirements of companies at different development stages and help them to transfer among different boards, even in different countries, such as the Catalist in Singapore.

Q: It's just your third trip to China. Why have you decided to devote yourself to the development of Chinese SMEs?

A: Just look outside the window of this skyscraper. The prospective central business districts in Beijing are similar to those of Paris. I will buy a house in China and come here more frequently.

I hope I can establish a life-long relationship with my Chinese clients. As my private requirement, every company that has been listed successfully will set my statue on the company's most eye-catching entrance. So when my grandson comes to China to visit these companies, he will feel proud.