OTC Markets Group, a US stock trading venue, says more Irish companies should follow the likes of AIB, Cairn Homes and Greencore in using its platform to court US investors without having to go down the route of seeking a full listing on the New York Stock Exchange or Nasdaq.
“Some of the largest global brands and corporations use us as their entrée into the US without the cost, complexity and risk” of being regulated by the US Securities and Exchange Commission, Jason Paltrowitz, executive vice-president of corporate services, said in a recent interview with The Irish Times.
He said the benefit for the home markets, where the stocks have their actual listing, is that trades are ultimately reported there, boosting local liquidity. The list of Irish companies that have opted to have their shares quoted on the market also includes FBD, Glenveagh Homes, DCC and C&C.
OTC offers trading in more than 200 European companies.
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While Mr Paltrowitz conceded that, primarily, US listing opens up the prospects of a company joining a key Wall Street index, he said mid-sized European companies have no chance of joining the S&P 500, the world’s most widely followed stocks index.
“The S&P 500 is only for the largest companies. If you are an ordinary Irish company being courted by investment banks about the benefits of a US listing, but are not eligible for the S&P 500, you are not going to see any real upside,” he said.
Mr Paltrowitz said non-US companies with market valuations of less than $1 billion (€850 million) often “essentially become orphan companies that are not traded a lot”.
The lack of investor interest is often compounded as companies that dump their home listing are also typically dropped by local analysts, he added.
“We hear from companies all of the time that have been enticed by US bankers to list in New York with pitches like, ‘It’s going be great. We’re going to raise a lot of money for you. Your CEO will have their photo in Times Square’,” said Mr Paltrowitz. “And after the transaction and the bankers have pocketed their fees, the companies find themselves running around in circles trying to maintain – and justify – that listing.”
OTC, which traces its roots back to 1913, has collaboration agreements with the Canadian Securities Exchange and Aquis Exchange in London, which is aimed at small companies, and recently struck a partnership deal with Deutsche Börse, which runs the Frankfurt exchange, to encourage the companies listed on their markets to tap US investors without opting for a full dual listing on Wall Street.
OTC is also in talks with Swiss stock exchange operator SIX Group AG for a similar agreement, and has a data distribution deal with the London Stock Exchange.
However, it has yet to convince Euronext, which runs the Irish market, of the merits of an alliance – even as it has lost a number of large primary listings to Wall Street in recent years.
These include Irish corporate giants CRH, Flutter Entertainment and Smurfit Westrock, formerly known as Smurfit Kappa.
Mr Paltrowitz said a formal alliance with Euronext – which runs six primary European exchanges, including Dublin, Paris and Amsterdam – would give the exchange operator a way to reassure European companies concerned that listing locally might limit access to well-funded US investors.
