Birkenstock's decision to go public on the New York Stock Exchange (NYSE) rather than just 150 kilometers away in Frankfurt was a significant blow for Deutsche Börse. While the financial impact of losing out on this IPO is small, the move has certainly tarnished Germany's reputation as a stock market hub.

Stock exchanges are under increasing pressure as more companies are delisting globally than are going public. „This is not a German phenomenon but a global one, except for Asian exchanges, which continue to grow“, says Martin Steinbach, an EY partner who heads the IPO business for Europe, Middle East and Africa. In Western markets, the influx of new issuers is no longer sufficient to offset the exits.

Competition among stock exchanges is intensifying. Deutsche Börse competes nationally with over 10 exchanges, in Europe with 50, and globally with 100. As part of the series „Trading places: Which exchange will shine in the beauty contest?“, Börsen-Zeitung examines what major exchanges are doing to attract new companies. While, as Steinbach notes, 90% of companies worldwide still choose their home market for a listing, exchanges should not rely solely on this factor.

The major US exchanges, Nasdaq and NYSE, are particularly active in Germany. „American exchanges like Nasdaq are much more present with growth companies, actively engaging in relationship marketing to attract potential IPO candidates“, states Eva Wiecko, who heads the equity capital markets division for Rothschild in Germany and Austria.

In American pitches, the focus is on the opportunities. In Germany, however, the approach tends to be different. „Here, companies often first learn about their obligations from lawyers, before discussing the benefits“, says Wiecko.

Steinbach notes the presence of foreign exchanges in Germany, with Euronext even having an office in Frankfurt, and Nasdaq and NYSE being present at industry conferences. He views this as a sign that Germany remains attractive, saying that „it seems that the relatively low number of IPOs in Germany is not due to a lack of potential.“

Wiecko would like to see more ambition from German exchanges in attracting international listings. „As the third-largest economy in the world, and the largest in Europe, Germany should also aim to bring companies from other EU countries to list here“, she says. For example, if investor demand at Nasdaq Stockholm is attractive enough for Traton to do a Dual Listing, German exchanges should be able to do the same.

However Deutsche Börse provides a counterargument. „Tui has just given up its secondary listing and is now focusing solely on Frankfurt“, notes Stefan Maassen, Head of Capital Markets & Corporates. Whether a secondary listing makes sense depends on the company's situation. For smaller companies, trading liquidity often concentrates on one exchange. Additionally, a dual listing increases complexity concerning reporting requirements and regulation.

Nonetheless Maassen is himself dissatisfied with the number of German IPOs and the global delisting trend. To address this, Deutsche Börse is engaging in numerous discussions with issuers about the advantages of listing in Germany.

Deutsche Börse also conducts regular workshops to prepare companies for the capital markets. „We have many initiatives to show companies that higher visibility through an IPO is advantageous“, says Maassen.

One example is the German Equity Forum, where Deutsche Börse connects companies with investors and family offices. „Last year, the forum hosted 255 issuers, who presented their equity stories and held over 3,000 individual meetings with more than 1,100 investors, family offices, and research analysts“, Maassen reports.

Deutsche Börse is also involved in the WIN Initiative, which focuses on venture and growth capital in Germany. This initiative focuses on the investor side, which according to investment banker Wiecko is necessary since the German market has less capital and fewer local investors compared to the US

However, a US IPO is not a guaranteed success either. „If a company like Lilium goes public in the US and its stock loses over 90% of its value, it shows that even a US listing does not guarantee a good share performance“, says Maassen. Among biotech companies, Biontech is currently the only German company trading substantially above its IPO price on US exchanges.

Maassen acknowledges that the US has developed a different ecosystem for biotech companies. For instance, there are scientists on the investor and banking sides who approach these industries differently. In Germany, research and scientific research need to be more commercialised.

Specifically in marketing, Deutsche Börse can still learn from its US competitors. Maassen seems to agree with this, saying that "what we can do more of is to press ahead with marketing – we're already working on it, but there is still potential for us to do more.“

More financially rewarding for exchanges is other business segments. Revenue from securities trading, settlement, and data and index services significantly exceeds listing fees. „But without stocks, the foundation for the entire value chain melts away“, warns Steinbach.