Getting Listed as a SME: Xlife Sciences Shows What’s Possible with Sparks

Getting Listed as a SME: Xlife Sciences Shows What’s Possible with Sparks

The listing of Xlife Sciences marked the ignition of the new, regulated Sparks segment at SIX Swiss Exchange. Read how Xlife Sciences CEO Oliver R. Baumann fared as a pioneer and discover what SMEs can expect from the Swiss stock exchange.

The spark jumped for the first time on February 11 shortly after 3:00 pm. The listing of Xlife Sciences on SIX Swiss Exchange fired the starting pistol for Sparks, the new, regulated segment at the Swiss stock exchange specifically for SMEs. “Maybe that’s why the spotlight at the SIX ConventionPoint felt especially bright and the traditional ringing of the cowbell at the Swiss stock exchange sounded especially loud to us that day,” Xlife Sciences CEO Oliver R. Baumann recalls with a chuckle.

A Listing Creates Visibility

Spotlights and the peal of bells, or attention in other words, surely ranks among the reasons why companies opt for listing in the first place. Baumann also likes to use the word “transparency” in this context, something that privately held companies often lack, he says.

Xlife Sciences went public in late 2019. Prior to switching its listing to SIX Swiss Exchange, shares of the company traded on the unregulated open market of the Munich Stock Exchange. The company, however, now has much greater visibility, Baumann says: “The listing on SIX Swiss Exchange acts like a confidence-building measure and an amplifier especially in the Swiss market, which is home to many of our current and potential investors.” This is all the more important, he explains, because the business model of Xlife Sciences has a couple of idiosyncratic features.

CEO Oliver R. Baumann celebrates listing of Xlife Sciences at SIX Swiss Exchange with David Deck, Founder and Head Senior Advisor.

CEO Oliver R. Baumann (right) celebrates listing of Xlife Sciences at SIX Swiss Exchange with David Deck, Founder and Head Senior Advisor.

How Does Xlife Sciences Earn Money?

Xlife Sciences advances the development of promising bioscience research projects from universities and other institutions and typically commercializes them over a time frame of two to three years. The Switzerland-based company thus views itself as an incubator and accelerator and not as a holding company. “We found the project companies ourselves and actively run them instead of merely acquiring stakes in them,” Baumann explains. “We make it possible for people to invest in the early stage of companies. This normally is a domain reserved to the private equity community, whose investments are locked in for a period of seven to ten years.”

The diversifying nature of the company’s business model also makes Xlife Sciences special. The number of its project companies – 23 at present – and their differing sizes alone help investors to spread risk across a spectrum of sectors ranging from technology platforms, biotechnologies, and medical technology to artificial intelligence for life science and health management.

At no time did SIX ever try to sell us anything. Instead, right from the outset SIX was a sparring partner.

Oliver R. Baumann, CEO Xlife Sciences

What Are the Benefits of Sparks?

Baumann says that this kind of business model is interesting to investors, not least to institutional investors. And they in particular appreciate the benefits of a regulated market. The possibility to obtain a listing on a regulated exchange segment was thus the main reason why Xlife Sciences opted for a listing on Sparks.

Issuer requirements on Sparks are less stringent than on the main market of SIX Swiss Exchange. However, all companies listed on the Swiss stock exchange are subject to the same reporting requirements and regulatory oversight. Comparable European stock markets for SMEs are structured as multilateral trading systems and thus are unregulated stock exchange segments. “If Sparks didn’t exist, we would have waited a while and then would have gone for a listing on the main market,” Baumann clarifies. Creating a liquid investment opportunity has always been the goal of Xlife Sciences, he adds.

A condensed trading window optimized for companies with small market capitalizations additionally bolsters the liquidity of stocks traded on Sparks, enabling investors to benefit from better price discovery and execution. Shares of companies like Xlife Sciences can be traded on Sparks continuously from 3:00 pm to 5:20 pm daily and during the closing auction and the trading-at-last period until 5:40 pm.

What Is Trading-at-Last?

Trading-at-last (TAL) is an extra trading period for stocks listed in Switzerland on SIX Swiss Exchange. TAL begins after the closing auction and enables market participants to buy and sell stocks at the official closing price on the Swiss stock exchange. This is useful to anyone who missed the chance to participate successfully in the closing auction or who would like to take advantage of the post-auction liquidity to trade at the official closing price.

In spite of the efficient path to capital via Sparks, Baumann makes no bones about the increase in operating overhead: “In the current initial stage and in a time of global crises, around 50% of our management team’s work goes into investor relations.” The preparations for the listing on SIX Swiss Exchange were also resource-intensive, he says, despite the “head start” from the open market. “But the listing has brought us further along as a company and compelled us to standardize our data and communications management.”

White Paper: The Future of SME Financing

SMEs are sometimes constrained when it comes to obtaining financing. As outlined in the recently released white paper “The Future of SME Financing” fundraising could be challenging for various reasons. For instance many investors would be reluctant to assume the potential risks that come with being exposed to SMEs. At the same time, in other cases, SMEs would lack knowledge about the financing options available to them. In the future, more SMEs will probably be able to benefit from growth advantages, the white paper predicts. The reason is technological progress and programs such as Stage or exchange segments like Sparks from SIX.

SIX produced the white paper in collaboration with the Swiss Research Institute of Small Business and Entrepreneurship of the University of St. Gallen.

Read the complete white paper “The Future of SME Financing”.

SIX as a Sparring Partner for Companies Seeking a Listing

“Despite all the work, there was still plenty of room for joyful anticipation thanks to the professionalism of SIX and the warm reception we got,” the CEO of Xlife Sciences continues enthusiastically. “At no time did SIX ever try to sell us anything. Instead, right from the outset SIX was a sparring partner that was just as much a part of our team as our lawyers and our house bank are. We encountered not just a product completely free of teething issues, but also a veritable ecosystem for startups and SMEs.”

SIX, in fact, offers future issuers e-learning courses and workshops, and operates supportive programs such as Stage, which raises a company’s visibility through independent equity research, and Bridge, which connects issuers with investors.

“I highly recommend to any company that wants to grow or increase its name recognition to get in contact with SIX as early on as possible and to utilize the tools that SIX provides. At the same time, we at Xlife Sciences are willing to share our experiences with other SMEs and startups,” Baumann emphasizes, coming across like a real ambassador for Sparks. “We are happy to do that – our role as a pioneer obliges us,” he says with enthusiasm.

It’s quite possible that Baumann himself will soon bring about additional listings on Sparks because the business model being pursued by Xlife Sciences is diversified also in terms of exit scenarios. Besides the possibility of selling a project company, folding it into a joint venture, or licensing patents, listing it on an appropriate stock exchange is likewise conceivable.