Made in Switzerland

Gnter Reichelt's year-old start-up, Evalis AG, is a company with high potential. The Cologne-based firm has developed a nifty product that sorts through a company's incompatible files and unstructured data and snaps them into line so they can be easily analyzed and compared or tied into the firm's website. It's the kind of product that will succeed or fail based in part on how quickly Evalis can grab market share. That in turn depends on how fast the start-up can attract investor euros and embed its product in customer consciousnesses.

A year ago, the obvious place for an ipo for such a firm would seem to be the Neuer Markt of the Deutsche Brse. "Last year, high-tech companies were getting buried in money in the Neuer Markt," says Reichelt. "It didn't matter what you were a free Internet portal, a web designer they all got money." Then came the second quarter of 2000, and everything turned. "Suddenly, all high-techs were bad, and all Old Economy companies were good," he says. "There were just too many IPOs for analysts and investors to analyze them all individually." So Reichelt decided to try his luck in little, non-euro Switzerland, where he'd opened a branch office and where his largest investor was based.

Like the Deutsche Brse, the SWX Swiss Exchange had set up a "New Market" segment of its own last year, SWX New Market. It has listed just 17 companies since inception, compared to about 320 on the Deutsche Brse's Neuer Markt. But unlike Germany, where the loosening-up of Deutschland AG had spawned an ipo boom involving many firms that had been in business for decades, almost all of the companies on SWX New Market are life sciences or technology and software operations. Share prices there have increased 57% since January, compared to a loss of 30% for the Neuer Markt.

The SWX Swiss Exchange found Reichelt lawyers to help with a cross-border ipo and banks that specialized in high-tech listings. "It's not the exchange's role to come up with company valuations," says Robert Wyss, who heads SWX New Market. "That's done by the banks that lead the offerings." Agrees Reichelt, "They put us in touch with people at Credit Suisse First Boston who grilled us the way most German bankers never did. They asked more of us, but they offered more as well." He says listing in Switzerland is a way of prequalifying investors: "Our story will be heard by people who understand it, and that's something you can't say about Frankfurt."

That is, if all goes according to plan. Internet money is still tight, and other German companies, particularly biotech firms, are racing to grab the publicity that's sure to accompany the first German ipo on the Neuer Markt's competitor. "We'll certainly have a few German companies next year," says Wyss, "but I can't comment on who it will be." The Deutsche Brse will still have the most sought-after address in the neighborhood, and the overwhelming majority of new listings of German firms will stay in Frankfurt. But for little companies trying to avoid the crowds and for savvy investors hoping to find Europe's next high-tech winner it may be worth looking at quieter enclaves for high-tech IPOs.