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‘Real’ Iseq 20 market value is more than double official list’s €100bn

Exits of heavyweights from Dublin stock market have triggered concern in the industry as to its future viability

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Malin Corporation, the life sciences investment firm cofounded by former Elan chief executive Kelly Martin after overseeing the pharma group’s $8.6 billion (€8 billion) sale to US peer Perrigo in 2013, floated on the Irish stock market nine years ago with great hopes.

The premise was simple: invest in a small portfolio of promising companies, keep its own costs down to a minimum and wait to reap the profits.

While the stock would jump 50 per cent over the first 15 months after its IPO, it didn’t take long for the market to become concerned about the ragbag of investments in start-ups across various fields of life sciences and Malin’s high head-office costs.

Martin’s contract was terminated in late 2017 and a strategic review the following year – after a wider management and board overhaul – saw it focus on less than a handful of priority investments.


Since late 2021, Malin has returned €236 million of cash to shareholders as it has sold down investments – including stakes Immunocore, which is focused on developing cancer treatments, and eczema-targeting Kymab. It values its remaining portfolio at €124 million.

Malin, with a market value of just €113 million, is today the smallest component of the Iseq 20, an index established 19 years ago this week for the largest Dublin-listed companies.

Its days on the index are numbered as it continues to eye “realisation” opportunities for its remaining investments and further cash returns to shareholders. But the Iseq 20 has bigger problems.

The total market capitalisation of Iseq 20 is now just over €100 billion, having shrunk dramatically in the past six months following the exits of the two largest groups on the market – CRH and Flutter Entertainment.

Between them, CRH and Flutter have a market capitalisation equivalent to about €85 billion, with each having increased in value since they took on listings on Wall Street, where stocks typically trade at a premium to European shares, relative to earnings.

US-listed stocks trade on an average of 21 times’ company earnings, compared to a ratio of 14 for European equities and 12 for the UK.

The moves are also down to the fact that North America now accounts for three-quarters of CRH’s earnings, while Flutter’s fast-growing US fantasy sports website, FanDuel, is increasingly pulling the group’s centre of gravity across the Atlantic.

The Iseq 20 will be further hollowed out over the summer as Smurfit Kappa, with a market value of about €11 billion, prepares to drop its Irish listing under a planned merger with US cardboard box-making peer WestRock.

“Right now, you have a G1 world in capital markets where the US accounts for over 70 per cent of the MSCI World Index,” said Noel O’Halloran, chief investment officer with KBI Global Investors in Dublin. G1 refers to group of one.

“Wall Street is acting like a magnet for companies that believe they’ll be rewarded more for listing there. Whether that’s an illusion or not remains to be seen.”

Barry Glavin, head of equity investment platform at Amundi in Dublin, said the recent heavyweight exits “seem to be primarily driven by the scale of their existi

ng US activities, their future growth opportunities in that market and their assessment that a US listing is important to capturing those opportunities”.

The number of listed companies in London has shrunk by more than 25 per cent over the past 10 years... This has been driven by private equity-fuelled buyouts of public companies and the growing attraction, particularly in the wake of Brexit, of the US and other markets

‘Real’ ISEQ 20

As it stands, the market cap of the official Iseq 20 is now less than half the €220 billion combined value of the 20 largest Irish public companies listed on stock exchanges on both sides of the Atlantic, according to Irish Times calculations.

This alternative, or “real”, Iseq 20 would be led by CRH, Flutter, Ryanair and clinical trials group Icon, which ditched its Irish listing in 2012 for a fully fledged one on the Nasdaq.

It would also include fuel-to-technology supplying conglomerate DCC and Woodie’s and Chadwicks owner Grafton Group, both of which are listed in London.

New York-quoted Dole plc, formed in 2021 through the merger of Fyffes spin-out Total Produce with Dole Foods, would also make the list.

It also takes in companies such as Zurich-listed bakery group Aryzta and New York-quoted drink cans group Ardagh Metal Packaging, which are domiciled in Switzerland and Luxembourg respectively but have Irish roots and retain some significant functions in Dublin.

However, it excludes companies that moved their registered headquarters to the Republic for tax reasons in recent decades or are the product of tax inversion deals that were all the rage in the early 2010s. Examples include Perrigo’s purchase of Elan or the world’s largest medical devices business, Medtronic, which is now a Dublin-domiciled business following its 2015 takeover of Covidien.

Current Iseq 20 components Uniphar, Glenveagh Properties, Ires Reit, FBD, FD Technologies, Kenmare Resources, Origin Enterprises and Malin, wouldn’t make the cut.

London woes

The recent Irish exits for New York come a decade after a slew of companies – including DCC, sandwich maker Greencore, and Grafton Group – ditched their local listings for the then bright lights of London.

The more recent shrinking of the Irish market, however, is more a reflection of a crisis at the London Stock Exchange. The number of listed companies in London has shrunk by more than 25 per cent over the past 10 years, according to research from trading platform XTB. This has been driven by private equity-fuelled buyouts of public companies and the growing attraction, particularly in the wake of Brexit, of the US and other markets.

O’Halloran said the exodus by a number of Irish companies to London a decade ago had not paid off for them.

“The companies would be no better or worse off today had they retained their main listings in Dublin. Of course, Brexit – and its impact on the UK economy and capital market – has had a major impact,” he said. “We’ve seen a derating of the UK market since Brexit.”

Plumbing supplier Ferguson quit the FTSE 100 in 2022 for a primary listings in New York. And UK computer chip designer Arm shunned London last year to pursue an initial public offering and flotation on the Nasdaq.

While there had been speculation that Swedish buy-now-pay-later group Klarna was gearing towards a London IPO after it set up a UK holding company in November, its chief executive Sebastian Siemiatkowski has since indicated that a US flotation was more likely. UK pollster YouGov has also threatened to shift its listing from London to New York.

CRH is among the companies to move its main quotation from London to New York as part of its listings rejig, resulting in its exit from the blue-chip FTSE 100 as it eyes access to the S&P 500, the index most followed by investors worldwide. Flutter plans to follow suit, subject to shareholder approval at its annual general meeting in May.

The move will “give greater access to much deeper capital markets” and provide “greater overall liquidity in Flutter shares”, the company said in an agm notice to shareholders.

Back in Dublin, the average daily value of shares traded on Euronext, which operates the Irish stock market, plunged by 30 per cent in the year to February, following the departures of CRH and Flutter in September and January, respectively.

The departures contributed to the Republic’s two largest securities firms, Davy and Goodbody Stockbrokers, each shedding jobs in their capital businesses over the past six months.

Dublin and London have company in their misery. In the past six months, the likes of Finnish sports-brand group Amer Sports, which owns Wilson tennis racquets and Salomon skis, and German sandal maker Birkenstock also listed in New York.

IPO drought

To make matters worse, flotations in Dublin have been few and far between in recent times.

Only three companies have floated on the Irish exchange in the past five years: Uniphar, the healthcare group; Corre Energy, a developer of underground storage solutions for renewable energy; and medtech firm HealthBeacon, which succumbed to examinership last October and ended up being taken over by US home appliances group Hamilton Beach.

The Republic doesn’t have a natural group of large institutional investors these days for IPO prospects to target to anchor share sales.

A coterie of Irish pensions and investment groups – such as Irish Life Investment Managers, AIB Investment Managers, Hibernian Investment Managers and Ulster Bank Investment Managers – typically acted “cornerstone investors” in IPOs in the 1980s and 1990s, taking large chunks of the new shares on offer.

However, a triple whammy since then of Irish pension funds being pressed by advisory firms to lower their exposure to Irish equities, foreign takeovers of the main local players and a general shift by the industry from active stock-picking to passive investment – where funds track stock market benchmarks – has all but killed off this old port of call.

Companies listed on the Irish exchange contributed €12.4 billion to the domestic economy in 2022 and employed or supported almost 90,000 jobs across the State, the Grant Thornton report said

Officials from Euronext Dublin and the wider Irish capital markets ecosystem are developing a detailed pitch for the Government to help reboot the IPO market, sources familiar with the project said last month.

They are seeking to flesh out proposals submitted last year but which met resistance in the Department of Finance, as they were not developed enough. That report, written by Grant Thornton, called for the establishment of type of 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. The hope is that that pitch will be ready for submission by the end of this month, according to sources.

The Grant Thornton report said a domestic exchange was “critical to supporting local enterprise”. Companies listed on the Irish exchange contributed €12.4 billion to the domestic economy in 2022 and employed or supported almost 90,000 jobs across the State, it said.

“Enterprise Ireland has backed about 6,000 companies in the past decade as part of Government strategy to support and grow indigenous Irish business. Having a viable stock exchange is a logical extension of that strategy, to secure further growth capital for companies that choose to stay independent and base themselves in Ireland,” said Joe Gill, director of origination and corporate broking with Goodbody Stockbrokers.

But there are bigger, global forces at play. Most western markets – including the US – have seen their lists of investible public companies shrink in recent decades as many public companies and would-be IPO prospects succumbed to the attractions of private equity money and trade sales in an era – until recently – of ultra-low interest rates.

The number of listed companies in the US has fallen from more than 7,000 to fewer than 4,000 since 2000, the Financial Times reported last week, citing figures from Wilshire, the investment services company. A similar trend has unfolded in Europe and Britain.

The so-called de-equitisation phenomenon has been compounded by companies using spare cash and borrowings to buy back chunks of their own shares. US investment banking giant JP Morgan estimates that about $1.2 trillion will be spent by companies globally buying back shares this year – broadly in line with each of the past three years.

A host of Iseq 20 companies, from AIB to Origin, have participated in that game, too.

Iseq All-Share breaches 10,000 for first time since 2007

The Iseq All-Share index, comprised of all companies listed in Dublin, has breached the 10,000-point level this month for the first time since early 2007, when the then-high-flying banking stocks began to teeter at the tail end of the Celtic Tiger.

The rebound lagged by more than a decade that of most other western markets from the great financial crisis. The FTSE 100 in London and Wall Street’s S&P 500 had each breached to their pre-crash levels by late 2013, while the pan-European Stoxx 600 index had rebounded by 2015.

“While the composition of the Iseq is very different from 2007, it is a significant milestone for the index to have broken the 10,000 [level] after such a long period of time,” said Damian Roddy, head of capital markets at stockbrokers Davy.

The Iseq All-Share has risen 16 per cent so far this year amid a wider advance by global markets, and hit a record high of almost 10,191 on Wednesday. It briefly rose above 10,000 during intraday trading on February 20th, 2007, but hadn’t closed above that level again until Wednesday of last week.

Still, the number of companies on the Iseq has fallen by more than 50 per cent over the period to just 26 today. Housebuilder Abbey, Aer Lingus and AGI Therapeutics, the first three in 2007 by alphabetical order, and final three, UTV, Veris and Waterford Wedgwood, are among those to have long exited the market.

While the exits of former market heavyweights CRH and Flutter have hit the market values of the Iseq All-Share and Iseq 20 this year, they have not affected the actual calculations of the indices as adjustments are made to the so-called index devisors.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times