Spain's National Securities Market Commission (CNMV) is urging major companies in Mallorca to go public as part of its plan to boost the stock market, which has been stagnating in recent years. There has been a lack of IPOs (Initial Public Offerings), while for every IPO there are just as many withdrawals by majority shareholders who have decided they don't see enough benefit.
The CNMV's principal targets in Mallorca include hotel groups - three of the so-called 'big four' which aren't on the stock market. These are Barceló, Iberostar and Riu. Meliá is a listed company. Of the three, Riu is believed to be particularly suitable. Carlos San Basilio, president of the CNMV, says Riu has the size "not only for a bond issue, but also for a strong stock market listing".
Riu is currently undergoing a generational transition. The family's fourth generation is assuming more responsibilities, and the commission believes it meets all the requirements for a listing. "There are cases of family businesses where going public has been a way to facilitate the succession. We are trying to convince them and convey all the real advantages of going public; then they have to weigh up the pros and cons and make their own decisions."
Advantages lie with facilitating long-term growth, but there is a reluctance based on a perception of having to comply with extraordinary obligations, especially regarding transparency and corporate governance. This, San Basilio argues, is more a subjective perception than a reality. "There is a fear that these corporate governance requirements could lead to a loss of control, especially among family businesses considering taking the plunge."
Despite the approach, it is understood that Riu is currently not contemplating a stock market listing. Other major Mallorcan companies that the CNMV would like to attract include Air Europa and Banca March.