Markets

Irish stock exchange owner pushes for retail investor scheme like UK individual savings accounts

Dearth of stock market flotations and high-profile delistings are driving a campaign for tax incentives ahead of Budget 2025

There is a growing sense of urgency to find ways to revive the IPO market on the Irish Stock Exchange. Photograph: Dara Mac Dónaill

Joe Brennan
Wed Jun 19 2024 - 06:00

Officials from the Euronext Dublin stock exchange and the wider Irish capital markets ecosystem are pressing the Government to launch a tax-friendly retail investment plan along the lines of the popular individual savings accounts (ISAs) scheme launched in the UK 25 years ago, according to sources.

Proposals submitted to the Department of Finance in an attempt to reboot initial public offerings (IPOs) on the Irish stock market call for the establishment of a so-called Irish Growth Capital Fund to act as a cornerstone investor in flotations, the sources said. The State-owned Ireland Strategic Investment Fund (ISIF) could be an anchor participant in this fund which would be backed by capital committed by the pillar banks and others, it has been suggested.

It is not clear whether there is any appetite in ISIF to participate in such a fund.

The document, filed with the department in May in advance of Budget 2025, also reiterated long-standing calls from Euronext, owner of the Irish Stock Exchange, for the introduction of tax incentives to allow company founders to sell some of their shares as part of a flotation.

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Representatives for Euronext Dublin did not respond to attempts to secure comment.

There is a growing sense of urgency to find ways to revive the IPO market in Ireland, given the dearth of stock market flotations in recent years, the recent exits of the two largest companies on the Iseq 20 – CRH and Flutter Entertainment – and the imminent departure of another heavyweight, Smurfit Kappa.

Only three companies have come to the market in Dublin in the past five years. The number of companies on the Iseq has fallen by more than 50 per cent since 2007 to 26 today.

The UK ISA scheme, launched in 1999, allows individuals to invest as much as £20,000 a year in various types of savings accounts, ranging from interest-earning cash ISAs to stock ISAs. Income and capital gains from investments in ISAs are exempt from tax.

The UK government announced plans earlier this year to set up a “British ISA”, with additional tax incentives, to encourage small-time investors to put money into London-listed stocks.

The Government here would be prohibited by EU state-aid rules from launching a similar scheme aimed at incentivising investment in stocks on the Iseq. A wider scheme focused on stocks across the EU would be of limited benefit to the Irish market.

Still, the umbrella group that worked on the pitch – comprising senior figures from Euronext Dublin and firms spanning stockbroking, corporate law, accountancy and financial public relations – has been emboldened by comments from Minister for Finance Michael McGrath last month that he was weighing tax changes to make it more attractive for people to invest their savings rather than have money sitting in low-yielding bank accounts.

Mr McGrath told The Irish Times last week that his officials are considering tax incentives as part of a review his department has been carrying out on the Irish funds sector, which is nearing completion.

“I don’t know what the recommendations are going to be yet in respect of retail participation and taxation, but I have asked them to look particularly closely at that,” he said. “And they understand what my policy objective is, which is to achieve greater [investment] participation by individual savers.”

Separately, Euronext Dublin is said to be weighing the notion of developing a so-called Euronext Access market, similar to ones operated by the wider group in Paris, Brussels and Lisbon. These are designed especially for start-ups and small companies that wish to join a stock exchange to finance growth and gain the reputational advantages of listing but do not meet the criteria for admission to main or even junior Euronext markets.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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