NY-listed Irish equities fund eyes more Dublin IPOs

The managers of a New York-listed fund focused on Irish equities, which is seeking to raise new money, expect Dublin will see further initial public offerings (IPOs) as the economy continues to expand in the coming years.

The New Ireland Fund, an actively-managed portfolio of up to 25 stocks run by Kleinwort Benson Investors (KBI) in Dublin, has been a supporter of newly-floated Irish companies in recent years, snapping up shares in forecourt retailer Applegreen, hotels group Dalata and AIB as they came to market.

“I believe we’ll continue to see selective IPO opportunities over the coming years,” Noel O’Halloran, portfolio manager and chief investment officer at KBI, said on a recent conference call. The group has a total of €9.7 billion of assets under management.

The Irish fund, which must have at least 65 per cent of its holdings in Irish companies and which has a market value of $48.2 million (€40.7 million), is seeking to raise additional funds by offering shareholders one share for every three held. The shares are being offered at 7.5 per cent discount to the stock’s closing price on the offer’s expiration date on December 6th.

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‘Positive momentum’

KBI’s pitch is based on Ireland’s fast-growing Irish economy and fresh “positive momentum in Europe”, which is helping the earnings of Dublin-listed companies, and the fact that Irish holdings in the fund are trading at a discount to markets internationally. At the end of September, the New Ireland Fund was trading 20.7 times earnings over the previous 12 months, compared to 23.7 for the MSCI All Ireland index, 22.2 for the European market and 24.4 for US equities, according to the firm.

The fund is focusing on three themes: investing in companies benefitting from the Irish economy, including Applegreen, AIB and Dalata; "quality" companies geared to improving European economy including Kingspan, Smurfit Kappa and French construction materials supplier Saint Gobain; and "world class" companies such as Ryanair, CRH and Kerry Group.