You might think it’s crazy for a company to consider listing on the public market during the coronavirus pandemic, but think again. Pexip, a Norwegian software company specialising in video conferencing, has broken a fourth wall of sorts by undergoing an initial public offering (IPO) virtually. It’s not only defied the downturn, but also paved the way for how other companies could list publicly in the future.
The company, now listed on the Norwegian stock exchange Oslo Børs, has around 240 employees and had raised a total of $25m prior to being listed in May 2020. Oslo Børs is part of the pan-European stock exchange Euronext, which covers Norway, Belgium, France, Ireland, the Netherlands and Portugal.
Pexip joins approximately 1,500 other listed companies within the exchange, which includes around 500 other tech firms. Euronext supports companies through the IPO journey, from accessing capital raising opportunities, advising them on the listing process and enhancing their visibility. It’s built up a whopping €3.3tn in market capitalisation which offers huge opportunities for listed companies, including further growth and internationalisation, increased visibility and liquidity to their shareholders.
A virtual vindication
When Pexip began planning the IPO process late last year, the team had no idea they’d soon be heading down a virtual rabbit hole. “The timing nevertheless turned out to be good for an IPO for us as the pandemic made the benefits of video communication extremely apparent,” says the company’s CFO Øystein Hem. As the company is rooted in video conferencing, it decided that a virtual process may not be such a long shot after all.
“The timing was good for an IPO as the pandemic made the benefits of video communication extremely apparent.”
“We are very used to using video communication and avoiding travel unless absolutely necessary. As the pandemic spread, it made it easier for us to convince the global coordinators supporting us and the financial community as a whole to use our technology and meet on video. They proved to be very adaptable,” says Hem.
Once the IPO process was going full steam ahead, all meetings were conducted through video communications, from project management sessions to investor roadshows, in over 15 different countries.
It was an eye opening moment for those involved, explains Odd Sverre Østlie, the Company’s CEO. “IPOs usually involve analysts, investment bankers, and company executives travelling around the world for presentations, creating a hectic and intense schedule. Conducting this IPO process [virtually] significantly increased the productivity and the reach of the team.”
Østlie says that a resounding 1,700 hours of travel time (over 70 days) was saved across the board, and the process also saved over 80 tonnes of CO2 emissions. “This is roughly the amount that 10 Norwegians use in an entire year,” adds Østlie.
Ringing the bells
In Pexip’s case, the virtual funding process, which priced the IPO at approximately €217m, felt relatively straightforward. The firm’s investment participation was a global effort, with institutional investors in the Nordics, the US, the UK and Europe. “We secured four strong cornerstone investors; Capital Group and Wasatch Global Investors from the US, DNB Asset Management in Norway and TIN Fonder from Sweden,” says Hem.
Celebrating Pexip’s launch on the exchange — which usually involves ringing a bell to open the stock market — took more creative thinking. But Pexip, with help from Euronext, found a workaround.
“Euronext has been very supportive during the entire process, and easy to reach regardless of the lockdown in Norway.”
“A ‘virtual bell ceremony’ was a great way to involve the entire Pexip team across the globe in the ceremony, not just a chosen few. We sent bells to all of our employees so that they could ring the bell on video at the same time as the CEO of the Exchange rang the bell for the first day of trading. It was a great way of involving the team in this milestone event,” commented Gillian Dalslaaen, VP of Marketing.
“Euronext has been very supportive during the entire process, and easy to reach regardless of the lockdown in Norway. With the ability to meet on video, share documents virtually and accept digital signatures, the cooperation couldn’t have gone smoother, even if we had been able to meet in person,” says Hem.
Following in their footsteps
Pexip’s CEO advises companies eyeing an IPO to take advantage of the technology that makes a virtual public listing possible, and make sure that the platform used is optimised for video to ensure high-quality meetings throughout the process. “Choose a product that allows meeting participants to easily participate from the device or platform of their choice. If you do that, you’ll break down the fear of using a new technology platform to join meetings.”
In many ways, running a virtual roadshow makes it easier to get good-quality potential investors interested in buying shares in your company, faster. “Instead of taking full days in the UK or the US, it is possible to start the day in Frankfurt, do lunch meetings in the UK and do afternoon meetings when it is early in the day in New York or California. This significantly reduces any trade-offs between which investors are the best fit for the company, and which geographies to prioritise,” adds Østlie.
It doesn’t seem like a bad idea after all to list on the stock exchange during these times, based on Pexip’s virtual IPO journey with Euronext. Companies could even go public sooner than expected, with the bonus of being more sustainable in the long-run — a win win. “An IPO process is extremely intense for all parties. Being able to cut down on travel time and jet-lag makes it less intense.”
Euronext is the leading pan-European exchange, covering Belgium, France, Ireland, the Netherlands, Norway and Portugal, with close to 1,500 listed issuers worth €3.3tn in market capitalisation as of end March 2020. Euronext is also the largest listing venue for tech companies in Europe with 481 tech issuers. Euronext’s mission is to support and help companies through and along their financing journey from before the listing through to the completion of the operation.