NEWSLETTER of June 16, 2023

The following content has been added at finexpert:

KfW Research
KFW-GRÜNDUNGSMONITOR
Start-up activity in Germany fell to 550,000 start-ups in 2022. Of these, 222,000 were full-time startups (40 %) and 328,000 were sideline startups. However, in one in five sideline startups, the intention is to expand self-employment to fulltime employment. The sustained positive development of the labor market has contributed significantly to this decline. The shortage of skilled workers will remain a major challenge for startup activity in the future. Overall, the number of female founders in particular has fallen, while the number of male founders has hardly changed. >more

European Investment Bank
ENTREPRENEURIAL FINANCE AND THE RUSSIAN WAR AGAINST UKRAINE: A SURVEY OF EUROPEAN VENTURE CAPITAL AND PRIVATE EQUITY INVESTORS
The EIF VC Survey and the EIF Private Equity Mid-Market Survey (the largest combined regular survey exercises among General Partners on a pan-European level) provide an opportunity to retrieve unique market insights. This publication is based on the results of the 2022 waves of these two surveys and examines how the Russian offensive war against Ukraine that started in 2022 affected VC and PE mid-market fund managers and their portfolio companies. The results show that the war - and the related consequences - had a strong impact on the two investor types and on entrepreneurial finance in Europe, inter alia regarding the challenges faced, investment strategies as well as LPs’ reaction to the changed macroeconomic and geopolitical environment. >more

Coller Capital
GLOBAL PRIVATE EQUITY BAROMETER, SUMMER 2023
Coller Capital’s Barometer is a unique snapshot of global trends in private equity – a twice-yearly overview of the plans and opinions of Limited Partners worldwide. This edition contains findings on: LPs’ expectations for private equity vintage years 2023 and 2024; attractive sectors and strategies for private equity investment; LPs activity around due diligence; challenges for LPs in the fund investment process; LPs’ views on the usefulness of AI in the PE transaction process; LPs views on the ‘anti-ESG’ movement in the US. >more

Bank for International Settlements
BIS RESIDENTIAL PROPERTY PRICE STATISTICS, Q4 2022
At the end of 2022, global house prices fell in real terms for the first time in 12 years, by 2% year on year (yoy) in aggregate. This reflected a moderation in nominal house prices, which are now growing less rapidly (+6% yoy) than consumer prices. The decline in real house prices was particularly marked in advanced economies (AEs) (–2.7% yoy), contrasting with the previous quarter's increase. Prices continued to fall in emerging market economies (EMEs) (–1.5%). Important differences remain across major economies. For instance, real house prices surged in Türkiye (51%) and grew more modestly in Japan (+4%), but were flat in the United States and declined by 10% or more in Germany, Australia and Canada. >more

THE EU PROSPECTUS REGULATION AND ITS IMPACT ON SME LISTINGS
Christoph Kaserer, and Victoria Treßel
2023
This paper analyses the economic consequences of the EU growth prospectus, a simplified listing document for SMEs, introduced by the Prospectus Regulation (EU) 2017/1129. For this purpose, we use a hand-collected database of 1,257 initial offerings at 8 different EU exchanges over the period from 2016 to 2022. 906 of these initial offerings were MTF-based and 113 used the EU growth prospectus. We find that to some extent the EU growth prospectus was successful in de-burdening and streamlining SME IPOs without jeopardising investor protection. In fact, we confirm EU growth prospectuses to be less complex in terms of word counts compared to full prospectuses. At the same time, we do not find evidence that they are less informative. We find SMEs to be more likely to use the EU growth prospectus when filing for an IPO unless the IPO becomes relatively large. In terms of listing expenses, we do not substantiate that the fixed listing cost component embedded in the overall listing expenses is smaller for companies using the EU growth prospectus instead of a full prospectus. Also, by using a difference-in-difference analysis we do not find robust evidence that the Prospectus Regulation led to a significant increase in IPO activity. >more

CORPORATE DISCOUNT RATES
Niels Joachim Gormsen, and Kilian Huber
2023
Standard theory implies that the discount rates used by firms in investment decisions (i.e., their required returns to capital) determine investment and transmit financial shocks to the real economy. However, there exists little evidence on how firms’ discount rates change over time and affect investment. We construct a new global database based on manual entry from conference calls. We show that, on average, firms move their discount rates with the cost of capital, but the relation is far below the one- to-one mapping assumed by standard theory, with substantial heterogeneity across firms. This pattern leads to time-varying wedges between discount rates and the cost of capital. The average wedge has increased substantially over the last decades as the cost of capital has dropped. Future investment is negatively related to discount rates and discount rate wedges, but only weakly related to the cost of capital because of the limited transmission into discount rates. Moreover, the large and growing discount rate wedges can account for the puzzle of “missing investment” (relative to high asset prices) in recent decades. We find that beliefs about value creation combined with market power, along with fluctuations in risk, explain changes in discount rate wedges over time. >more