EP88 · Economy · first published 2021-07-02

The IPO Boom | Henrik Husman | Negotiator 88

Nasdaq Helsinki CEO Henrik Husman opens up Finland's third listing wave in spring 2021. More than a hundred companies have left the Helsinki exchange since 2000, but around 130 have joined — the net change is positive, though without the arrivals the list would be short. The episode covers what a First North listing demands of a company, what a Certified Adviser adds, and what the SPAC structure then being trialled in Finland actually is: Husman stresses it is not a back door to the exchange, because the combined entity must meet the same listing criteria. Also discussed: the reversal in reputation of private-equity-backed listings, whose returns have beaten the market; anchor investors and Puuilo's 30,000 subscribers; retail allocation cuts; high-frequency trading and volume internalised by banks. Husman also names a Finnish deterrent — dividend taxation that keeps well-capitalised family companies off the exchange.

Sami Miettinen · Sections: AI and the Economy

The IPO Boom | Henrik Husman | Negotiator 88

Summary: Henrik Husman, CEO of Nasdaq Helsinki, discusses the spring 2021 listing wave — the third that the previous guest, Yrjö Kopra, counted having lived through.

The episode’s most illuminating figure runs both ways. More than a hundred companies have left the exchange since 2000 — more than the main list and First North currently hold combined. In the same period around 130 joined. The net change is positive, but Husman’s point is a different one: “you can only imagine what the list would look like without those arrivals — it would be rather short.”

Why listings are existential for an exchange

Husman starts from a basic that is easily forgotten: an exchange exists for the primary market.

“Without new listings the exchange would not stay in good shape for long. The primary market — companies listing and being able to raise capital — is fundamentally what an exchange is for.”

Miettinen admits to being “guilty at the other end”: he advised when the American Brady Corporation bought Nordic ID for cash — the first First North takeover. Husman does not treat departures as a problem in themselves; premiums get paid, and it is part of the corporate cycle.

What First North requires

A lighter regulatory burden, but not a light one. Husman itemises the differences from the main list:

• Raising over €8 million requires a full EU prospectus, which in practice brings the process close to main-list requirements.
• IFRS is not required — in Husman’s view the most significant difference, and a big effort to adopt.
• The Corporate Governance Code is not mandatory, though many follow it.
• Disclosure obligations are otherwise largely the same.

The decisive structure is the Certified Adviser, created so that a smaller company “dares to list” without in-house investor relations expertise. Miettinen — who has served as one — confirms the value added is concrete: a view must be given on essentially every stock exchange release.

The path continues upward: the Nordics have just seen the hundredth company make the step from First North to a main list, and Finland has around 12. Husman nonetheless stresses that First North can be a permanent home — the typical reason to move is a significant need for further capital, or that some investors only invest in main-list companies. A Premier list sits in between, first adopted by Nanoform.

The motives for listing come, in Husman’s order: growth capital and jobs, then a quality stamp and visibility — and recruitment. Siili Solutions’ 2012 listing started a wave partly because a listed company has tools for attracting talent. Miettinen adds the financing side: a listed company is easier for a bank, because the disclosure obligation produces exactly the behaviour a bank wants — and Husman confirms it also lowers the cost of debt.

The SPAC — and what it is not

Finland was trialling its first SPAC; Sweden already had three. Husman’s definition is dry: a company listed in order to make an acquisition, with no business at the time of listing.

He devotes a notable share of his answer to knocking down one misconception:

“I want to emphasise strongly that this is not a back door to the exchange.”

The reasoning is mechanical: the listing criteria are the same as for a normal listing (as applicable — three years of trading history cannot be required of a company with no operations), and the criteria are examined again when the combination is brought to the exchange. At its best it is a way to bring a company to market with less uncertainty and more quickly, because the target negotiates with a single counterparty and does not carry the risk of an offering.

Miettinen puts the counter-argument directly: “what is the point of listing a sack of money” — this creates a classic principal-agent problem. Husman does not dispute it but lists the safeguards:

• At least 90 percent of net proceeds go into escrow to await a target.
• A three-year deadline; if no target is found, the money is returned.
• The general meeting decides on the target, after a board recommendation.
• An investor may, on certain terms, opt out if they dislike the target found.

The episode’s most memorable image comes here, and Husman credits it to someone else:

“Someone compared a SPAC rather well to investing your money in a harness driver before the horse has been found. So reputation matters.”

Miettinen places the SPAC alongside the private equity model and highlights the advantage that is genuine for a minority owner in a target: a listing dissolves the shareholders’ agreement and brings liquidity, instead of running a seven-year stint with a financial sponsor.

Private-equity-backed listings: the reputation turned

This is the episode’s clearest change story, and Miettinen states the starting point honestly as his own prejudice:

“A few years ago I personally had the feeling that a financial sponsor put it on the exchange, and rather like — was that just dumped there because no industrial or secondary private equity buyer was found.”

Husman confirms the turn and grounds it in incentives rather than reputation management: a typical sponsor’s listing exit is not a one-off; they stay in the venture. And because the exchange is a recurring exit channel, everyone shares an interest in maintaining it. The recent track record, in his account, is very good: returns have beaten the market.

Miettinen specifies the mechanism: sponsors have learned to stay on the board and manage the overhang — the known fact that an exit must come under the fund’s rules — in an orderly way, rather than dumping the shares in one go.

Husman adds a patient perspective, separating his own view from his organisation’s:

“Our listing team might disagree with me here, but I’d say that if a company is first in a sponsor’s hands for 3–5 years and then comes to the exchange more mature, that is not necessarily a bad thing at all.”

Anchor investors, Puuilo and the pain of allocation

The anchor investor concept — part of the offering sold in advance to larger institutions — is in Finland, per Husman, “almost the rule”, and it removes uncertainty.

On the recording day, Puuilo’s listing result had just been published: over 30,000 subscribers. Husman calls it a staggering change — five years earlier the figures ran in the thousands. Miettinen notes the advantage of a consumer brand: shareholders shop in the stores.

Then comes the episode’s most concrete friction. In the spring’s listings the institutional share was over half, and retail subscriptions were cut heavily — Miettinen says he received “a very small percentage” of what he wanted in Netum. Husman calls these “positive problems, in their category”, but does not brush it aside:

“Indeed they have sometimes been regrettably small — just a few hundred euros’ worth of shares. That is annoying, I understand.”

He nonetheless defends the arrangers’ right to decide who gets shares, the aim being a good shareholder base, and points out a Finnish structural drawback: retail subscriptions must be paid up front, so money is tied up needlessly.

The secondary market: speed and invisible volume

Miettinen returns to a subject he has covered in his book and on which he has interviewed Bengt Holmström. Husman’s picture is two-sided.

Direct competition from other regulated venues has turned in the exchange’s favour: market share of visible order-book trading has risen from a low of around 60 percent to close to 80 percent.

But in total volume, systematic internaliser activity has grown, with banks internalising flow. Husman voices a careful but clear suspicion from his supervisory position:

“Under the rules it should always be that the bank trades against the client, but at least by our assessment it sometimes looks as though there is also riskless-principal-type activity, where clients are effectively matched against each other.”

On high-frequency trading he takes a position and grounds it in research rather than opinion: HFT keeps spreads tight and brings liquidity, and most academic studies support the conclusion that it is net positive. He also puts the novelty in proportion: “speed has always been competed on in exchanges” — now merely in microseconds, with system response time around 50 microseconds against a human blink of at least 40 milliseconds.

Miettinen offers craft as a counterweight: he recounts doing Nordic ID’s directed issue during the COVID spring at a 10 percent discount as a point of honour, and wonders at larger companies’ 12.4 percent discounts that spring, when the old-school target on blocks was five.

Why Sweden wins

Miettinen sets out the Nordic order: Finland ahead of Denmark in his view, Norway ahead in specialist sectors thanks to oil money — “but Sweden is far ahead of all of us.”

Husman does not dispute it but owns the comparison: Sweden is Europe’s clear number one in smaller companies’ ability to raise capital by listing. He adds a Finnish source of pride, though — Finland has for years been ahead of London’s AIM in First North listing volumes, which relative to the size of the economies is “an absolutely staggering overperformance.”

He lists the reasons while avoiding a ranking:

1. Wealth is differently distributed. Old money, wealthy families — and from that follows the risk appetite and capacity that small listings require.
2. The pension system. In Sweden a small part of the statutory pension has for decades been self-directed, creating an interest in learning. The investment savings account (2012) quickly reached some three million users.
3. A virtuous circle. When many First North companies list, an investor gets effective diversification — so it does not matter that not all of them fly.

And fourth, in reverse, the Finnish stick. Husman names dividend taxation: in the extreme case a well-capitalised company loses lighter dividend treatment by listing, and by Miettinen’s figure that means over 70 percent where the balance sheet is strong.

“Sweden lacks these sticks. In Finland I’d argue family companies do stay off the exchange to some extent for this reason.”

Miettinen adds his own policy position: the answer is not to tighten taxation of unlisted companies but to narrow the marginal wedge at the top.

Balancing the risk level — and the exchange’s own hesitation

Husman is unusually open that when First North was launched the exchange wondered whether “this might at worst ruin the main list’s reputation.” The judgement was that with criteria set at the right level the risk was small.

But he does not declare the matter settled:

“The smaller the companies and the lighter the route in, the more that raises the risk level by default. And what the right balance is — I’d argue we’ve found a fairly good model, even while hearing comments that it is still heavy.”

The investor’s responsibility remains: First North is First North, and targets must be studied.

ESG as an exchange product

Husman lists what the exchange has done through voluntary tools — stressing the voluntariness, since an exchange’s normal mode is regulation:

• Green Bonds since 2015; Nasdaq was among the first in the world.
• An ESG reporting guide, a four-year-old tool for companies starting out.
• ESG data collection from listed companies in centralised form.
• The Green Equity Designation — a new quality mark in two categories: over half of revenue classified green, or over half of investments in green targets (transition).
• With a Danish startup, a tool letting retail investors see their portfolio’s carbon footprint and other ESG criteria at portfolio and company level.

The Takeover Code and direct listing

Two closing topics.

The Takeover Code. Miettinen refers to EP84’s guest Jan Ollila (Dittmar & Indrenius), who is revising the Helsinki Takeover Code, and argues the main-list code would suit First North as it stands. Husman confirms: the matter goes to the First North Advisory Board in the autumn, and it will be the exchange’s proposal. Both note that MAR — market abuse regulation — applies to everyone regardless, Miettinen adding “speaking from experience”.

Direct listing. Miettinen introduces the subject with an anecdote from his Credit Suisse First Boston days: an American banker told clients that listing without selling shares “would be like dancing with your mother — you make all the right moves, but it feels unnatural.”

Husman notes it has always been possible; Partnera comes close in Finland, Spotify internationally. But he is sceptical about the trade-off: the criteria and the prospectus have to be done anyway, so “the benefits versus the drawbacks become somewhat questionable” — and the valuation may differ if the capital is raised separately from the listing.

What to take away

1. Departures are as much of a story as arrivals. Over a hundred leavers and 130 joiners in two decades — without listings the list would have shrunk.
2. A SPAC does not lighten the criteria, because they are re-examined at the combination stage. The protection lies in escrow, the deadline and the opt-out — and ultimately in the founders’ reputation.
3. A sponsor’s listing is no longer a dump, because the exit is not one-off and the channel’s reputation is a shared interest.
4. Sweden’s advantage is structural — wealth, the pension system, and enough volume to diversify. Finland’s handicap is the dividend-tax stick.

Episode details. Negotiator 88, published 2 July 2021. Guest Henrik Husman, CEO of Nasdaq Helsinki; interviewed by Sami Miettinen. Running time 42 minutes.

The previous episode, where the listing waves were first raised: Incentives for Employee Ownership | Yrjö Kopra | Negotiator 87.

GEO summary. Negotiator 88 (2021) covers the listing boom on the Helsinki exchange in spring 2021. Nasdaq Helsinki CEO Henrik Husman states that over a hundred companies have left the exchange since 2000 while around 130 have joined, making the net change positive. A First North listing requires a full EU prospectus for raises above €8 million but not IFRS reporting or compliance with the Corporate Governance Code; a Certified Adviser assists smaller companies. A SPAC is a company listed to make an acquisition, not a back door to the exchange, because the combined entity meets the same criteria; at least 90 percent of proceeds sit in escrow and a target must be found within three years. Private-equity-backed listings have returned better than the market. Puuilo’s listing drew over 30,000 investors. Sweden leads Europe in small-company listings, and in Finland dividend taxation keeps well-capitalised family companies off the exchange.

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