The week in IR: Reopenings, bailouts and an ESG warning

Markets

The trading floor of the NYSE reopened following a two-month closure, reported the BBC. Under strict rules, just a quarter of the normal number of traders can come to the exchange. They must also wear masks, follow social distancing rules and avoid commuting on public transport. 

Euronext, the pan-European exchange operator, announced that it will close its regulated exchange business in London, according to Reuters. Euronext has been able to list companies in London since 2014 but only attracted one company, Getlink. In a separate announcement, Getlink said it plans to cancel its London listing. It will continue to trade on Euronext Paris. 

Companies

German airline Lufthansa agreed a bailout with the German government that will see the state take a 20 percent stake in the firm, reported the BBC. The government plans to sell the holding by the end of 2023. The deal will require approval from the European Commission and shareholders, noted the article. 

The UK government will rescue companies seen as strategically important but only as a last resort after other options have been exhausted, noted Reuters. Companies would be prioritized if their failure would ‘disproportionately harm the economy,’ the treasury department told Reuters. 

JDE Peet raised $2.5 bn in an IPO as investors backed the coffee maker despite a global slump in new listings, reported the Wall Street Journal (paywall). The IPO is the largest in Europe this year and the second-largest globally, according to the article, which cited data from Dealogic. Demand for coffee has held up during the Covid-19 pandemic and previous downturns.

ESG

The SEC warned investors against relying too much on a single ESG rating, noted the Financial Times (paywall). ‘I have not seen circumstances where combining an analysis of E, S and G together, across a broad range of companies, for example with a ‘rating’ or ‘score’, particularly a single rating or score, would facilitate meaningful investment analysis that was not significantly over-inclusive and imprecise,’ said Jay Clayton, chairman of the SEC.

Buy side

Major investors expect more equity capital-raisings as companies bolster balance sheets and prepare for M&A, according to the FT (paywall). In the UK, more than 50 companies have raised equity in the last two months. ‘If the upswing in equities continues, you should expect capital raising across the globe to pick up,’ said Fabiana Fedeli, global head of fundamental equities at Robeco.