The Irish Stock Exchange is putting IPO back on the agenda, writes Orla O’Gorman, as she explains what attracts companies to list in Ireland and talks about the challenges facing exchanges.
The Irish Stock Exchange (ISE) is the international shop window for enterprise in Ireland. It’s the market place where companies were able to raise over €23bn from global investors in the past decade. It’s the place where issuers from 81 countries around the globe choose to list over 25,000 debt instruments and 7,300 funds. Fundamentally, our role as an exchange is about facilitating access to capital and we are passionate about how best we can support the current and next generation of companies, both in Ireland and Europe, to raise funds and attract international investors.
ISE-quoted companies are characterised by diverse, international shareholder bases; approximately 67% of their investors are located outside Ireland, which is significantly higher than those quoted on exchanges in Europe such as London, Paris or Frankfurt. Investors also represent an important source of new capital for expansion. In the past two years, companies used their ISE listing to raise over €2.7bn in new funds.
The majority of trading for companies dual-listed in Dublin and London occurs on the ISE. This means that more investors – both Irish and international – choose to direct their trading through the ISE. The number of trades executed on the ISE was over four million last year – an all-time high and a 30% increase on 2013. Turnover totalled over €63bn, again an increase of 10% on the previous year.
Over 80% of the ISE’s 48 trading member firms are international. As well as the well-known nationally-based firms, such as Davy and Goodbody (who have international networks and sell to institutions across the globe), ISE’s equity members include names such as Merrill Lynch, Credit Suisse, BNP Paribas, UBS, Investec and Cantor Fitzgerald. What attracts them? An easily accessible, efficient trading platform with competitive fees that allows their customers anywhere in the world to buy and sell shares.
More than 88% of companies on the Irish market are dual -listed with other exchanges. The ISE has facilitated dual listings by harmonising its admission requirements and ongoing obligations with other exchanges.
This option is encouraged by the ISE as it offers these companies the best of both worlds – a presence on both Irish and overseas exchanges with the investor access and profile benefits that these listings bring, including access to euro, sterling and dollar pools of capital.
Currently, companies quoted on the ISE have active dual listings with exchanges in the United Kingdom, the United States, Canada, France and Switzerland.
Bringing companies to market
Research recently published by PwC shows that the ISE has seen above average IPO activity, as measured by funds raised, relative to other European peers. Constantly regenerating companies on the stock market is a challenge for all exchanges but the ISE saw eight new companies join the Irish market in the last two years.
However, more could be done – globally and nationally – to support IPO’s. The US recognised this fact following a fall in the number of US listed companies by 44% over five years and examined the issue under its JOBS Act in 2012. Europe is belatedly looking at this matter with the recent establishment of an IPO Taskforce.
The IPO agenda is recognised in Ireland as being really important to economic development.”
There is no single silver bullet to generate more IPOs. Instead there are a myriad of factors that need to work in parallel – regulation, fiscal policy, incentives and the availability of other options like trade sale and bank financing. What is good to see is that the IPO agenda is being recognised in Ireland as being really important to economic development.
Supporting the next generation
Exchanges are part of the solution – we are committed to supporting the corporate success stories of the future by making the route to market as straightforward as possible.
But clearly we cannot control certain things that might encourage Irish companies to scale such as Government tax policy for entrepreneurs, investor taxes like stamp duty and European securities regulation for markets, which is constantly evolving. However, we are currently putting in place three real, tangible measures to facilitate potential IPO candidates.
#IPOready is a support programme for potential IPO candidate companies. Launched in January 2015, it is over-subscribed evidencing that ambition to IPO is returning to the corporate agenda. #IPOready is receiving huge support from executives in Irish listed companies, Government agencies, members of the Irish securities industry and most importantly the next generation IPO candidates themselves.
We are publishing a new guide to assist companies in preparing to list on the stock market, the ESM Guide, which is being launched with the first day of the #IPOready programme. It will be available from www.ise.ie in March.
Aligning US and European markets
We are developing a new market, the Atlantic Securities Market (ASM), intrinsically aligned with the US from both a regulatory and trading perspective, to facilitate the next generation of companies who want to access capital from both sides of the Atlantic.
This new market is being designed with Irish, European and US companies in mind.
Fundamentally, our aim is to ensure that the ISE remains a vibrant, attractive, internationally attractive shop window. We are here to support and enable companies to raise capital and realise their full potential. Our doors are always open to hear your story.