Companies listed on the Irish Stock Exchange, Euronext Dublin, contributed €12.4 billion to the domestic economy last year, according to a report commissioned by the exchange and local stockbrokers, which calls for Government support to reboot the market as departures outpace initial public offerings (IPOs).
The report, written by Grant Thornton, has called for the establishment of a so-called “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.
It also urged that stamp duty on Irish share trading be abolished – something Euronext Dublin has long campaigned for – and that Enterprise Ireland and Euronext initiate a fresh campaign to encourage companies to consider listing. Enterprise Ireland was among the four parties to commission the report.
“Ireland is at a pivotal moment with regards to public listings. Action is required to ensure the domestic equity market remains a viable funding mechanism for Irish companies, commercially viable for market participants, and continues to support the funding needs of Ireland’s growing companies,” the report said. “A local exchange is critical to supporting local enterprise.”
Dublin-listed companies employ approximately 47,000 people across the State, directly generating €6.7 billion in wages, the report said. A further 40,000 jobs are indirectly supported by such companies, it added.
All told, the publicly-quoted companies contributed about €12.4 billion gross value added to the economy last year, including indirect impacts, it said.
The figure was based on 2022 data, before a series of announcements from some of the largest companies on the Stock Exchange heightened the existential crisis facing the Irish equities market.
CRH, previously the Iseq’s largest company, delisted from Euronext Dublin last week as it moved its primary quotation from London to New York. Another heavyweight, Smurfit Kappa, said earlier this month that it also plans to quit the Irish exchange for New York as part of a merger with a US peer.
Both, however, have committed to remaining domiciled in the Republic.
Flutter Entertainment, owner of Paddy Power, is also expected to leave the Irish market in the near future, having decided earlier this year to take out a listing in the US.
Department of Finance officials have warned that nutrition company Glanbia, insulation maker Kingspan and food group Kerry may also be tempted by a US listing. The last Irish IPO was HealthBeacon in December 2021.
While the Grant Thornton report said that cornerstone funds are key feature of other small markets, it noted that stakeholders that participated in a consultation on the market were “not unanimously agreed” on what parties should invest in such a fund. State agencies, the Irish pillar banks and family offices were highlighted variously as potential investors, it said.
“Reinvigorating Irish equity capital markets is too urgent to be the responsibility of one actor,” it said. “Government and stage agencies, regulators, Euronext, brokers and advisers all need to work together to build a pipeline of potential IPO companies and incentivise key decision makers within companies to choose an Irish listing.
“Companies that list in Ireland are more rooted to Ireland, thus delivering greater economic impacts.”