The chief executive of Euronext, the pan-European stock exchange operator, has confirmed that the group is working on plans to set up a “springboard” market in Dublin for small companies to list, in a bid to stem the erosion of the Irish cash equities market.
Stéphane Boujnah, chief executive of Euronext, said in an interview with The Irish Times in Dublin late last week that establishing a Euronext Access market in Dublin, similar to ones operated by the wider group in Paris, Brussels and Lisbon, “could have a big impact in terms of addressing the needs of SMEs”.
Euronext Access markets are designed especially for start-ups and small companies that wish to join a stock exchange to finance growth and gain the reputational advantages of listing but do not meet the criteria for admission to main or even junior Euronext markets.
The chief executive of Euronext Dublin, Daryl Byrne, said companies joining a Euronext Access market could ultimately form a pipeline of businesses that could take out full listings.
The self-help initiative, which The Irish Times first reported in June to be under consideration, comes as Euronext is lobbying the Government for assistance to reboot the exchange’s equities business. About half of the trading volume of Euronext Dublin has been wiped away in less than a year with the exits of former Iseq heavyweights CRH, Flutter Entertainment and, earlier this month, Smurfit Kappa, which went on to merge with US rival WestRock to form Smurfit WestRock.
The number of companies on the Iseq All-Share index has fallen by more than 50 per cent to 25 since Euronext acquired the what was then known as the Irish Stock Exchange in 2018, as takeovers and delistings of public companies outweighed initial public offerings (IPOs). Only three companies have come to the market in Dublin in the past five years.
CRH, Flutter and Smurfit Kappa also exited the FTSE 100 as part of a rejig of their listings that saw each move its main quotation to Wall Street, while keeping a secondary listing in London.
“What’s happening in Dublin is much closer to what’s happening in London than the rest of Europe,” said Mr Boujnah. “The rest of Europe… we’re not seeing this exodus of companies, even if we are seeing a smaller number of IPOs.”
He noted that this has been exacerbated – among other things – by the growing trend of companies funded by private equity being sold in “second and third rotation” deals to other private equity firms, rather than IPOs being a first exit of choice.
Officials from Euronext Dublin and the wider Irish capital markets ecosystem made a submission to the Government in May looking for a series of supports to reboot the domestic equities market.
These include: a tax-friendly retail investment plan along the lines of the popular individual savings accounts (ISAs) scheme launched in the UK 25 years ago; Government backing for the establishment of a €400 million cornerstone fund to invest in IPOs; and tax incentives to allow company founders to sell some of their shares as part of a flotation.
“Things work when there is a consistent partnership between governments, exchanges and the business community,” said Mr Boujnah.
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Mr Boujnah rejected persistent speculation in Dublin financial circles that Euronext was only ever interested in the Irish exchange’s hugely successful debt and funds listings businesses, rather than its cash equities market.
He said the group’s large investment since the takeover in moving trading in Dublin to its Optiq platform and the effort undertaken to shift the settlement of Irish trades from London to Euroclear Brussels post-Brexit reflected its commitment to the market.
