Listing of French companies in the United States: the American dream put to the test – Governance & Strategy > Finance function

From the 1990s, several French companies decided to be listed in the United States, in addition to France. Yet this move has become rare in recent years despite several attempts by Wall Street to simplify IPOs for foreign companies. In addition, several French companies withdrew from the American market, such as Air France in 2008, allowing it to save 20 M€ according to the press. Several other large groups have followed the same path or are considering doing so (Danone, BHP, etc.).

The strong representation of the OTC market

At the end of June 2022, 107 French companies can be traded on US stock markets. For 89 of them, it is the possibility of being traded on the over-the-counter market. OTC (Over The Counter) but it is not a real stock exchange listing. The tool used is named ADR (American Deposit Receipts). It consists of groupings of shares of the company listed in France which can be traded on the American markets as if they were listed there (the price is denominated in dollars and the transactions can take place during the opening hours of the stock exchanges in UNITED STATES). The liquidity generated by the OTC market is low because it is mainly reserved for individual investors, with institutional funds generally trading securities directly on the French stock exchange. On the other hand, the access procedure is inexpensive and much simpler than for a stock exchange listing.

A stronger attractiveness of the Nasdaq

At the end of June 2022, only 18 French companies are actually listed on the US stock exchange : 13 on the Nasdaq4 at a time on the Nasdaq and the NYSEand one on the NYSE (Constellium, metal industry society).

the Nasdaq therefore has a much higher attractiveness than the NYSE. 13 French companies among those listed there, ie more than three quarters, belong to the biotechnology and information technology sector. The Nasdaq attracts small and mid-caps which find it difficult to finance themselves on the French and European markets (65% of them have a stock market value of less than 500 million euros).

The many advantages of a dual listing in the United States

The American stock markets are subject to particularly strict regulations (in particular following the Sarbanes-Oxley law implemented after the Enron scandal), guaranteeing increased security for shareholders. Additionally, they have a very large base of institutional investorsallowing very significant fundraising : for example, the French biotech Inventiva was able to raise 107 million dollars during its recent listing on the Nasdaq.

Moreover, these markets are much more mature for biotech and technology companies; they benefit from many specialist analysts and investors as well as comparable listed companies (biotechs benefit from very good coverage). Europe does not have a Nasdaq equivalent. However, after thefailure of a first attempt to create a European Nasdaq named EASDAQ (bought in 2001 by Nasdaq), Euronext recently created the “Tech Leaders” index (July 2022).

The limits of a double listing in the United States

It is important to remember that a listing on Wall Street requires a huge workload ; it takes between 2 to 6 months for the preparation and 3 to 5 months for the implementation. In addition, this involves cultivating (well in advance) relationships with opinion-leader investors, the main actors in the success of the listing. Indeed, in the absence of a lot of work with investors, French companies are likely to lack visibility alongside the very many successful Americans listed on the Nasdaq or the NYSE.

the financial cost is also very high : for example, it is necessary to count 1 M€ of audit costs (vs 0.2 M€ on Euronext), between 1.5 and 2 M€ for lawyers (vs 0.2 and 0.4 on Euronext) and 7% commission for investment banks (vs. 3.5% to 5% on Euronext). In the event of a lawsuit / class action, the managers, all the directors of the company and even the investment banks can be held responsiblehence extensive due diligence and very strict rules for drafting the prospectus.

The attraction of a dual listing in the United States not really justified Nowadays only for biotech and the information technology companies. Above all, this allows them to raise much larger sums of money than in Europe when they were listed on the stock market. On the other hand, it is not a guarantee of success concerning their stock market valuation. On the one hand, the value of the company at the IPO will always be linked to that on Euronext and on the other hand, 11 French companies listed on the Nasdaq saw their share price at the end of June 2022 drop on average. by 74% compared to their introductory price, including Erytech -95%, Cellectis -94%, and Biophytis -93%.

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