The Board of Directors of Mercado Alternativo Bursátil (MAB) has approved the creation of a new market segment for Private Equity Firms. The market will be an addition to the SICAVs market segment, which started operations on May 29th.
The listing of private equity funds and companies on an organised market allows these firms to benefit from greater liquidity and transparency and helps to popularise this new asset class; it also facilitates the incorporation of these assets into the portfolios of both retail and institutional investors.
Private equity has gained momentum in Europe and Spain and constitutes a valuable source of financing and a valuable tool for the management of companies that are not listed on stock exchanges.
The law 25/2005 of 24th November, which regulates private equity firms and their management entities, gives these entities more flexibility and introduces new financial vehicles, which are becoming ever more common in our neighbouring countries. One of them is the possibility of diversifying investment by creating private equity funds and firms, the assets of which must be invested basically in this type of instruments. This vehicle has been designed to broaden the traditional investor base in private equity by including other investors, such as institutional and even retail investors.
The regulation of the Mercado Alternativo Bursátil (MAB) envisages the trading, settlement and registry of securities or financial instruments which, due to their specific features require special treatment, such as private equity firms, both whether they invest in other private equity companies or directly, in securities issued by private equity firms.
MAB’s market model for securities issued by private equity entities will be based on a price fixing facility which will match supply and demand during an auction period or “fixing”.
The creation of Mercado Alternativo Bursátil (MAB) was promoted by Bolsas y Mercados Españoles (BME) in order to offer an alternative to those securities which, due to their specific features, require special treatment. Its creation was authorised by the Cabinet Meeting on 30th December 2005.
MAB’s trading system started on May 29th, when the first SICAVs joined the market. Currently it lists 1,459 companies.
