The recent programme for government had more than a touch of the one-for-everyone-in-the-audience about it, pledging everything from reducing pupil-teacher ratios in schools to working to get the Dublin Airport passenger cap lifted.
But the ad hoc group of officials from Euronext Dublin, stockbroking, accountancy, PR and law firms that huddled together in recent years to beg the government to support the rapidly shrinking Dublin stock market considered it a feat when their cause got two mentions in the almost 160-page tome.
It promises to work closely with the exchange “to ensure future growth, focusing particularly on small-to-medium-sized fast-growing companies” and explore ways to “enhance” the market “as a vital source of equity and growth for indigenous businesses”.
There was a nod to the 232-year-old Dublin equities market in the October budget. It offered companies going through initial public offerings (IPOs) up to €1 million of tax relief on expenses and said the Department of Finance will scrap stamp duty – subject to state aid considerations – in 2025 on the trading of shares in Irish SMEs.
Still, the stock market ecosystem – the so-called Irish Equity Market Forum (IEMF) – has its work cut out convincing Merrion Street of the merits of its other proposals. They include calls for State banking for a €400 million cornerstone fund to invest in Irish IPOs and a tax-efficient savings scheme for individuals to invest as much as €40,000 in listed companies. The latter would have EU-wide scope to meet state-aid rules.
To advance the cause, the IEMF plans to establish itself as a formal lobbying body in the coming months.
The wider economic importance of the exchange is often overlooked. As of 2022, companies listed on the Irish market contributed €12.4 billion to the domestic economy, directly employed 47,000 and indirectly supported a further 40,000 across the Republic, according to a Grant Thornton report commissioned by IEMF two years ago
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The industry group faces a challenge driving this home to a Government that is hooked on jobs and windfall taxes from foreign multinationals. However, it might get more of a hearing in the world of Trump 2.0, where tariff and tax policy risks hang over Ireland’s foreign direct investment model.
“We need funding solutions that keep growing Irish companies in Ireland,” according to Joe Gill, a director of corporate advisory with Goodbody Stockbrokers. “A vibrant domestic stock market has to be a key part of that.”
Euronext Dublin knows it must help itself, too. This is why it is setting up a “springboard” market for small companies to float and finance growth but which do not meet the criteria for admission to the main, or even junior, Euronext Growth markets. It will replicate the Euronext Access markets the wider Euronext Group already runs in Paris, Brussels and Lisbon.
The crisis in the Dublin market is concerning. Three IPOs on Dublin in the past six years have been more than offset by a flurry of exits – including Applegreen, CPL Resources and Hibernia Reit being taken over and CRH, Flutter Entertainment and Smurfit WestRock ditching their Irish listings and as they moved their main quotations to New York.
The exodus means the Iseq 20 is now a shadow of its former self. It is now forced to count Malin Corporation, which is essentially in winddown, and engineering tools company Mincon, worth a little more than €100 million, among its members.
However, the reboot has to start somewhere. Euronext Dublin chief executive Daryl Byrne told The Irish Times this week he expects the access market to launch in the first half of this year, initially with at least two companies, most likely from the tech sector. He said there has been a “good level of inquiries” from interested firms.
“By offering a more simplified and flexible listing process, Euronext Access is an important first step in encouraging more indigenous companies to list on the public markets,” said John Mullane, chief investment officer at Cantor Fitzgerald Ireland. “Measures to encourage more investment in these scaling companies however will be crucial to ensure its ultimate success.”
The hope is that some companies joining an access market could ultimately move up to Euronext Growth or, in time, the main market – even if the rate of this is low elsewhere. Only 13 companies have uplisted – 12 in Paris and one in Lisbon – since this type of market was launched in 2017. There are currently 173 companies across the three existing access markets.
The success or otherwise of the imminent market in Dublin hangs on the quality of the companies that brokers, accountancy and legal firms bring to it.
The last two Irish IPOs – medtech firm HealthBeacon and renewable power storage developer Corre Energy in 2021 – have not covered the ecosystem in glory.
HealthBeacon succumbed to examinership in 2023. How much longer will Corre Energy remain listed? Its market value has slumped 94 per cent in the past 12 months, to €7 million, as it continues its search for much-needed investment.
Promoters of the access market must discourage speculative, early-stage companies in favour of solid but ambitious businesses with proven revenue track records.
If they take a short-term view and bring a slew of speculative tech start-ups, resulting in a high failure rate, they will end perma-chatter of an existential crisis at the Irish equities market. By killing it entirely.
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