Bucharest Stock Exchange (BVB), Romania’s main capital market operator, aims to have at least five companies listed on its new platform for small and medium enterprises by the end of this year, according to Ludwik Sobolewski, BVB’s CEO.

“Our goal is to re-launch this market by a simultaneous debut of several companies. Desirably, most of them will have offers conducted completely before this moment,” Sobolewski said in a meeting with the press.

His goal is to create a market where smaller companies in Romania and even startups can find financing, such as the NewConnect which he created in Warsaw, while he managed the stock exchange there, or the AIM market in London. The NewConnect market in Warsaw was launched in 2007 and currently has more than 430 companies listed with a total market capitalization of EUR 2.3billion.

The new market for smaller companies of the Bucharest Stock Exchange, which is called AeRO, will replace the current alternative trading system (ATS) and will come with new rules which should make it easier to access by private companies and more efficient.

First of all, this will be a market regulated, but not by the Financial Supervisory Authority (ASF) but by the BVB itself. This should reduce the paperwork and the time needed for a company to prepare its listing on this market. Companies which will want to be listed on AeRO will no longer need a prospectus approved by the ASF. The main requirements for listing would be that the companies have a free-float (shares owned by minority shareholders) of at least 10% of their share capital, or at least 30 shareholders, and an anticipated market capitalization of at least EUR 250,000.

For Bucharest Stock Exchange, the target would be to have as many of the new companies coming to this market raise money first, as the main goal of this market is to be a financing alternative for these companies.

“Almost every new company that comes on this market should first pass the test of the market, even if they sell a small stake to a small number of investors. Most of these companies will probably raise money through private placements, which are addressed to no more than 150 investors,” Sobolewski explained.

Although this market won’t be very liquid, it should be interesting for investors, not only local but foreign as well, due to the fact that they can invest in growing businesses, which they cannot find on the regulated market of the Bucharest Stock Exchange, where most companies already have a stable market position. These small companies that will be listed on AeRO will be able to later raise more money and be listed on the BVB, as they develop their business.

Intermediaries will have a key role on the new market segment. They will be called Authorized Advisors and all companies that want to be listed on AeRO must have one. The advisor will prepare the company’s documentation for listing and will support it through the first year after listing by helping it with financial reporting and communication to investors.

The BVB expects this market to be launched in about two months, after the documentation and the rules of the market will be approved by the Financial Supervisory Authority.

Andrei Chirileasa, andrei@romania-insider.com