SWEDEN Law and Practice Contributed by: Corinne Ekman, Mikael Nagy and Joacim Kanstedt, Gernandt & Danielsson Advokatbyrå KB
6.2 IPO Exits During the hay days of 2021 and 2022, several IPO exits of start-ups took place in Sweden, including the IPOs of Polestar, Oatly and Truecall - er. However, the Swedish IPO market has been relatively slow since then, leading to fewer IPOs in general. Although there has been an increase of notable IPOs of venture capital-backed com - panies more recently (such as Yubico’s de-SPAC listing in 2023 and subsequent uplisting to the main market at Nasdaq Stockholm in 2024, and the IPO of Cinclus Pharma), the IPO exit route remains challenging with insufficient IPO liquid - ity available. Despite the slow IPO market there is optimism for an upturn in IPO activity during 2025 and 2026, which should also enable IPO exits for start-ups. There are multiple listing venues in the Swed - ish market, the most prominent of which are the regulated marketplace of Nasdaq Stockholm, being primary exchange for larger and more mature companies, and the MTFs Nasdaq First North Growth Market as well as NGM Nordic MTF, being a less regulated and more flexible trading venue suitable for smaller companies with high-growth potential. It is common that start-ups typically list on an MTF and make an uplift to the main market after a period of time. Historically, start-ups typically have pursued offering structures consisting of a combination of existing shares (secondary offering) and new shares (primary offering). However, during 2023 we also saw the IT-security company Yubico’s IPO via a de-SPAC, which is quite unusual in the Swedish market. 6.3 Pre-IPO Liquidity The market for secondary shares in Sweden is generally very active with both Swedish and for - eign investors acquiring shares in sought-after
but it is also common for it to be contingent upon a specific threshold being met – eg, 10% of shares in a single transaction or multiple transactions being effectuated to the same transferee. In essence, the tag-along acts as a protection for minority shareholders which may otherwise have difficulties exit - ing a portfolio company in case the majority decides to liquidate its positions and transfer its ownership to a third-party acquirer. • Drag-along rights: These rights are intended to allow for a specified majority of sharehold - ers to force minority shareholders to sell their shares in the event of – eg, a trade sale, ensuring that the transaction can proceed without minority holdout issues. One key point to remember is to include an authority for a representative of the dragging majority to represent the dragged parties during the sales process to further avoid any unneces - sary hiccups during the sales process. The drag-along provision will typically require a qualified majority in order to be applicable, and such constellation can take many dif - ferent forms, from including both a majority of ordinary shares and preference shares to specific veto rights for a certain class of share and/or investors. While the authors have not seen any whole - sale shift in exit-related rights, the slowdown in liquidity events is reshaping expectations and bringing more investor-friendly exit mechanisms into play, especially in later-stage rounds. There are also discussions around continuation funds and other structured secondary structures on the VC market in Sweden, particularly in light of extended exit horizons in certain verticals such as deep tech and life science, as well as insuf - ficient IPO liquidity available.
530 CHAMBERS.COM
Powered by FlippingBook