According to a new study conducted by Arthur D. Little Consultants, a premier global consulting firm, entitled “Austrian Mid-cap Companies and their Success” mid-caps – companies with a market capitalization of EUR 100m to EUR 5bn – currently account for 70% of the companies listed on the prime market, an important segment of Wiener Börse, the leading regional exchange in Central Europe.
The study, presented today at a press conference in Vienna reveals how these companies are becoming increasingly profitable and globalized and in recent years shows how their market value has increased on average by a staggering 33% per year. The report analyzes the development of eleven Austrian mid-caps including Agrana, Andritz, BWT, Constantia Packaging, Mayr-Melnhof, Palfinger, RHI, Rosenbauer, Semperit, Wienerberger and Wolford.
“The outstanding development of the stocks is based, primarily on the success of the respective company. Wiener Börse also contributes to this success by giving the listed companies access to international investors. After all, more than half the trading volume is already being generated by international banks,” stated Heinrich Schaller, joint CEO of Wiener Börse AG. Wiener Börse has become more international, but it is still easy to follow: “Moreover, on a smaller national exchange, the stocks of medium-sized companies also have a greater chance of receiving the best support possible from professional financial service providers and also of receiving more attention from investors. This is one of the most important reasons why trading volumes and stock prices develop better locally than on foreign markets,” said Mr. Schaller.
Talking about the findings from the study, Bernhard Nagiller the author commented: "There is a common misconception that Austrian mid-caps are traditional, established companies lacking in dynamism. On the contrary, these are strong, global players that often belong to the top five providers in their respective segments. Alongside the success provided by an IPO, these companies have often achieved these leading positions by keeping a clear focus on a specific industry as well as by following a very successful M&A strategy. 80% of the companies examined invested more than half of the capital raised by the public offering in acquisitions and therefore in future growth."
Success factors: Media presence and low staff fluctuation
The Arthur D. Little study also revealed that media presence contributed to these companies’ successful development. Almost all of the companies analyzed increased their media presence by over 100% in the year of going public. This increase in recognition was achieved irrespective of the size of the company and is used by these mid-caps in a number of areas including sales, employee recruiting and public relations work.
According to the author of the study, Austrian mid-caps tend to concentrate on the creation of sustainable value rather than on short-lived measures with high risk, a fact that can explained by the ownership structure: “Seven of the eleven companies have 15% retail ownership, and in four cases, the retail share was over 50%. This high percentage of private ownership is reflected in the long-term perspective of the strategic decisions and in the low degree of staff fluctuation.” The companies benefit from the very low management turnover according to Mr. Nagiller: “For example, at one of the companies analyzed, there were only three management generations in 60 years (by comparison, many blue chip companies often switch the management board every four years). Another company revealed that on average employees worked 15 years at the company and there were no major fluctuations in the management over the last few years.”