Three listed companies could exit Lisbon stock exchange
Euronext Lisbon, which will adopt new regulations from March, has admitted that two or three listed companies might be “downgraded” because they don’t meet new rules for minimum free-float capital which come into force from April.
It could even mean that they will be forced to quit the stock market PSI-20 listing according to Isabel Ucha, who runs the entity.
Three companies are rumoured to be about to leave; Pharol (telecoms), Ramada (a company specialising in steel components for industry), and Novabase (an IT software and technology company).
The changes had already been announced last year with the PSI-20 being renamed simply PSI. It will also cease to have a minimum limit of 18 listings. Moreover, there is a new requirement that listed companies now have to meet: they must have a capitalisation of €100 million in free-float.
Given the new rules, Euronext Lisboa President Isabel Ucha expects “two or three” listed companies which are currently on the PSI may have to leave the index when the new rules come into force in the spring.
“By eliminating this minimum of listings on the PSI, and with the free float, we can currently see that two or three companies may not meet the minimum €100 million, which means that the index would have less companies”, said Ucha on Thursday in a virtual meeting with journalists.
However, she said it would only be at the end of March, when the capitalisation of companies had been verified, that a picture of which companies might have to leave the PSI would be ascertained.
“If we want a stronger and more attractive index, we cannot only have small companies”, she said.
Isabel Ucha said that she had to explain “thoroughly” new rules to issuers, particularly those which would leave, especially those who would lose the most under the new rules.
“An index that isn’t fit for investors also isn’t fit for issuers. We have observed that were products indexed to the index that began to disappear ,and others whose business began to gradually fall”, she explained.
The president of the Lisbon stock market also stressed that for those companies that do leave, it would have a relatively or very limited impact on the companies affected.
The PSI-20 currently lists 19 companies that closed 2021 with a total stock capitalisation of €82Bn, the second highest value since 2000, coming second only to 2007 when it stood at €90Bn, just before the subprime crisis in the US.