Officials from Euronext Dublin and the wider Irish capital markets ecosystem are developing a detailed pitch for the Government to help reboot the initial public offerings (IPOs) market here after a report submitted last year met resistance as its proposals were not fleshed out, according to sources.
As many as 20 senior figures from the Irish stock market operator and firms spanning stockbroking, corporate law, accountancy, and financial public relations have been divided into three working groups seeking to develop three core recommendations from the 2023 report, they said. Euronext Dublin is co-ordinating the effort.
The report, written by Grant Thornton, called for the establishment of a so-called “cornerstone fund” to participate in IPOs, tax incentives for retail investors to put money into public companies, and tax breaks for founders or owners of companies that join the market.
There is a growing sense of urgency to find ways to revive the IPO market, given the dearth of flotations in recent years, recent exits of the two former largest companies on the Iseq 20, CRH and Flutter Entertainment, and planned departure of another heavyweight, Smurfit Kappa.
Only three companies have come to the market in Dublin in the past five years: Uniphar, the healthcare group; Corre Energy, a developer of underground storage solutions for renewable energy; and medtech firm HealthBeacon, the last IPO, which occurred in late 2021. HealthBeacon was delisted last month, as it emerged from examinership after running out of money.
“There is a growing realisation that this is not just a Euronext problem, but an Ireland Inc problem,” said a source familiar with the project.
The hope is that a detailed set of proposals will be submitted by the group, known as the Irish Equity Market Forum, to the departments of Finance and Enterprise, Trade and Employment by the end of April to get in at an early stage of the last budget cycle before a scheduled general election, the sources added.
Is Ireland in recession?
Many would-be IPO prospects have succumbed in the past decade to the attractions of venture capital, private equity money and trade sales, in an era — until recently — of ultra-low interest rates. Dublin has also been hit more than most western markets by an international trend in recent decades of a shrinking pool of investable public companies, a phenomenon known as “de-equitisation”.
The Grant Thornton report suggested that the diminution of the Irish stock market — which had been used by the likes of CRH, Ryanair and Kerry to grow into international leaders in their respective sectors — raises existential questions.
“Action is required to ensure the domestic equity market remains a viable funding mechanism for Irish companies, commercially viable for market participants, and continues to support the funding needs of Ireland’s growing companies,” the report said. “A local exchange is critical to supporting local enterprise.”
Companies listed on the Irish Stock Exchange, Euronext Dublin, contributed €12.4 billion to the domestic economy in 2022, according to the Grant Thornton report.
Dublin-listed companies employed approximately 47,000 people across the State, directly generating €6.7 billion in wages that year, it added. A further 40,000 jobs are said to be indirectly supported by such companies.
The average daily value of shares traded on Euronext Dublin, which operates the Irish stock market, plunged by 30 per cent on the year in February, following the exits of heavyweight groups CRH and Flutter Entertainment from the market over the previous five months.
The global number of IPOs slid 16 per cent last year to 1,429 deals, amid uncertainty about the economy and soaring interest rates, according to the latest S&P Global Market Intelligence data. The figure was off 40 per cent from a record set in 2021, a year which only saw two IPOs in Dublin.
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