SDA Bocconi Executive MBA and Borsa Italiana: a meeting of European excellence

At the end of their journey, on 24 June, Class 17 of our Executive MBA met Professor Andrea Sironi, Vice-President of Bocconi University, President of Borsa Italiana and of the Italian Association for Cancer Research.

The subject of the meeting was Borsa Italiana, now a major member of Euronext, a network of seven national stock exchanges where the Italian one carries the most weight. Euronext is the main financial market in Europe, followed by the London Stock Exchange (which Borsa Italiana used to be part of) and Deutsche Boerse.

Euronext hosts around 6200 institutional investors mostly based in the US and the UK, and 1850 listed companies, with an aggregated capital of over 5 trillion euros. Note that about a quarter of these firms have a lower capitalization than 25 million. Borsa Italiana brings a set of excellences to Euronext:

• A unique technological and cybersecurity infrastructure: unlike other European stock exchanges, Borsa Italiana has not recorded a single incident during the last decade;
• The MTS platform (Mercato dei Titoli di Stato, Government Bonds Market), also an undisputed European standard, together with aftermarket and clearing house activities;
• 5 different Equity segments and 3 Fixed Income segments, of which some are dedicated to private companies. One of the most outstanding is AIM, a non-regulated market hosting about 140 companies to date;
• the Equity STAR segment, especially appreciated and given high profitability margins by institutional investors as a consequence of the strict liquidity and governance requirements companies that are listed there must comply with;
• last but not least is ELITE. Launched in 2015, today it is the largest international network for small and medium-sized enterprises. There are over 1600 of them, from 43 different countries, whose aggregated income totals about 110 billion. Almost 500 of them have already carried out capital market transactions.

What can we foresee in the present and immediate future?

Our domestic Equity market still has room ahead, since Italy’s so-called “Buffett Ratio,” i.e. the overall market capitalization to GDP ratio, approximates 40%, while it exceeds 100% in the UK. Estimates are that around 2800 companies could go public in Italy, whose aggregated capitalization is worth about 70 billion as of today. The high level of liquidity in circulation and the consequent expansion of valuation multiples mean that Private Equity operators are both competitors of Borsa Italiana in approaching companies, but also possible collaborators in the exit phase. The Asset Management industry, which was globally worth 90 trillion dollars in 2019, is changing as well. Of special interest are transfers from active to passive fund management and growing alternative investments. On the other hand, it is unlikely that Europe will have a single stock exchange in the end, like Wall Street in the US. It is far more probable that the connection and federation process between national networks continues, which is exactly the way Borsa Italiana decided to fare when it joined Euronext.

Italy has got everything it needs to restart and grow, and our Executive MBA participants are ready to bring their distinctive skills to this new venture.



SDA Bocconi School of Management.