WFE Interview with Eric Forest, Chairman and Chief Executive Officer of EnterNext (NYSE Euronext Group)

Author Name: 
Eric Forest
  1. You have recently been appointed Chairman and Chief Executing Officer of EnterNext. Can you explain us what EnterNext is?

EnterNext is a new marketplace for SMEs. This new subsidiary of NYSE Euronext is dedicated to companies with a market cap of less than €1bn, i.e. listed companies from B and C Compartments of NYSE Euronext and NYSE Alternext.

Our mission is to foster close and trusting relationships with both listed companies, helping them to make better use of the exchange - through secondary offerings (shares or bonds) - and with non-listed firms so as to present them the benefits brought by financial markets at a time when access to bank loans has become more complicated. Moreover, we will be actively engaged in promoting the market to investors. All in all, one objective : to position the exchange as an alternative source of financing. Last but not least, EnterNext is a pan-European initiative, and already covers the 750 SMEs listed on NYSE Euronext European markets  in Belgium, Netherlands, Portugal and France.


  1. What are its objectives ?

Financial markets should be an active source of additional financing for SMEs in a crisis environment. The market experience of listed SMEs is different from large caps and the creation of EnterNext provides us with the means to define and set up a strategy to address the particular needs of small and mid-capitalizations. All the SMEs resources (human, technical and financial) are gathered within a dedicated subsidiary so as to develop added-value services for all stakeholders. The achieved synergies must ensure a personalized and close follow-up of the companies but also introduce a new dynamic : creation and promotion of new services and financing instruments, development of the investors axis, federation of the ecosystem, lobbying actions towards French and European public authorities etc.

Our goals don’t lack ambition. We want to raise the number of listings to over 80 companies a year within three years (i.e., three times higher than at present)—and boost the capital raised by SMEs on primary and secondary markets. Granted, those numeric objectives depend on market conditions.

We have the resources that match our ambitions. EnterNext resources are increased by 15% compared to what was previously allocated by NYSE Euronext to SMEs. EnterNext has an open governance, with seven independent directors, chosen for their experience and expertise in the SMEs environment.


  1. Why did not you remodel top to bottom the existing structure to create a new exchange?

The project’s operational and legal feasibility were looked at : to create a single market compartment for SMEs was a heavy-duty operation, costly for both Euronext and issuers, without added value and risky (critical size may not have been met). We wanted to capitalise on our efficient market structure but also on NYSE Alternext success.

Discussions with issuers, stakeholders and key associations in the SMEs market indicated that the real factors holding back growth were not our listing structures, but rather insufficiently targeted prospection and follow-up. So NYSE Euronext decided that the follow-up of issuers in the B and C compartments and on NYSE Alternext, as well as the coordination of initiatives with stakeholders in the SMEs ecosystem, would be placed under the independent leadership of a team with strong ties to the entrepreneurial community, backed by enhanced resources.


  1. How and when will you be deploying on a regional basis ?

To strengthen the regional axis is one of our priorities and meets a strong demand from entrepreneurs. Proximity with business leaders is a significant element for the success of  EnterNext. In addition to a strong field presence of EnterNext team, local representations will be set up in major French cities as well as in Lisbon, Brussels and Amsterdam.


  1. SMEs suffer from a lack of interest from investors. What action are you considering taking?

This is a critical issue. The presence of investors determines the viability of the whole economic model : trading, liquidity, financial analysis, etc. Even though interest in SMEs appears to have declined lately, I do not believe in fatality. A highlight of our strategy will be to reconnect SMEs and investors. We will work with the entire spectrum of European investors whose base has widened in the last five years : Asset Managers, Private Equity and  Family Offices etc.

Within this frame, we will pay close attention to the legal, regulatory and tax-related evolutions. We will support any initiative from public authorities aimed at channeling savings to the financing of SMEs, as for instance in France, the pending creation of the SME-PEA.


  1. We know that the lack of analysis for small and mid-capitalizations has been an ongoing problem, issuers have long complained about. What are your plans to foster financial analysis on SMEs by intermediaries ?

You are right, the lack of financial analysis on SMEs is a real challenge, which will be discussed in depth very soon with all the stakeholders. Furthermore, a number of concrete actions have already been led by NYSE Euronext and deserve further studies. 

More generally, work meetings with financial intermediaries will assess the relevance of both the market model and their business model and the improvements where required. We will also evaluate to what extent issuers may be interested in financing investment research when coordinated with a marketing effort.


  1. How do you intend to involve the various stakeholders in restarting exchange transactions and reach listing and fund raising objectives?

The creation of EnterNext illustrates our desire to inject fresh momentum into the SME market and to involve all stakeholders. This movement must be carried forward : we need the implication and support of the whole ecosystem. Conversely, EnterNext will also help stakeholders in their efforts towards investors and issuers. During our initial roadshow, we found great expectations and a strong will of stakeholders to take part in this project.

EnterNext first board, decided the set-up of a Users’ Committee in each country with members representing companies, brokers and investors, tasked with building strong local momentum and taking the initiative to provide input on all issues of interest to SMEs.

Eventually, I remind that all those measures are inscribed in the continuity of NYSE Euronext efforts to bring together the ecosystem as illustrated by the support to the creation of representative associations.


  1. You have recently launched the Initial Bond Offering (IBO), can you tell us more about it?

The IBO is NYSE Euronext new European bond offering program dedicated to SMEs. It allows listed and unlisted small and medium-sized businesses in Europe to turn to institutional investors and the general public for financing. The subscription process is identical to an IPO process.

This bond offering broadens the sources of financing for the companies concerned, while reducing the dependency on bank loans and reflects NYSE Euronext’s commitment to SMEs.

Launched in France in H2 2012, the program will be available in Belgium, Netherlands and Portugal by the end of the year.


  1. What impact will ICE takeover of NYSE Euronext have on EnterNext ?

The ICE-NYSE Euronext deal does not call into question the long term existence of EnterNext, quite the contrary! ICE has already come out publicly in favour of this project, which is essential for the future of Euronext; as a pan-European exchange.


About Eric Forest

Eric Forest joined NYSE Euronext Group as Chairman and CEO of EnterNext in July 2013.

A graduate of Ecole Nationale Supérieure des Mines de Nancy, Eric began his career in 1986 and joined the ECM team of Société Générale in 1992. In 2003 he moved to Oddo Corporate Finance to head up their Equity Capital Markets business, where he oversaw IPOs, follow-on issues and secondary offerings. He was also in charge of Corporate Broking.

Over the last ten years, Eric has always worked in support of SMEs. He has participated actively in industry-level discussions (AMF, AMAFI), helped numerous mid-sized companies gain access to the market through his ongoing responsibilities at Oddo, contributed to the creation of an analyst team dedicated to SMES and served as Chairman of ALIS, the association of NYSE Alternext’s Listing Sponsors.