Since last summer, we estimate no less than €1.3bn of new equity finance has been raised in the Irish stock market. Green Property completed an IPO that raised €310m for investing primarily in Irish commercial property. Last week, Hibernia inked another IPO that raised €365m for property investing, while Bank of Ireland completed an equity placing for €580m.
Drill bit company Mincon (based in Shannon) and gaming business GameAccount also joined the ISE, while Independent Newspapers raised money via a placing. This completed a six-month period of positive funding activity on the Irish exchange that has been unmatched for about eight years.
The intriguing aspect in all of these transactions is the quality of institutional investors attracted to the deals. Each of them won substantial financial support from global blue chip equity investors who have committed hundreds of millions of euro in support of Irish enterprises. Those investors had no difficulties using the ISE to access these companies, have no complaints about the regulatory structure, and, importantly, they have confidence in the secondary trading of shares in these companies on the Dublin market.
This point is important. I’ve listened to dozy commentators and a few private companies express the view that the ISE was a poor platform for progressive companies seeking equity finance. The glittering lights of the London and New York exchanges are, through that prism, more attractive centres in which to raise risk finance because they apparently have deeper pools of capital.
This argument assumes stock exchanges operate in geographical silos that limit the flow of capital. Nothing is further from the truth. The existence of advanced communication and electronic trading systems ensure that investors can research, invest, and trade in equity instruments listed in Dublin faster and cheaper than is the case in centres such as London and New York.
Green Property, Hibernia, and Bank of Ireland will tell you about the breadth and depth of interest that rapidly developed around their equity offerings which were promoted using the Dublin market. In each case, professional investors examined the companies before committing capital. In each case, the equity offerings were oversubscribed.
This level of interest is not just about investing in the Irish economy (although that is a hugely important element). International investors see value in backing good business cases presented in a coherent and consistent fashion.
These developments take place against a global equity market which is open for IPO business.
That is being helped by improving economies, ultra low interest rates, and greater demand for equity risk exposure. Private companies in Ireland, who have ambition and solid strategies for expansion, should note the real and persistent appetite by demanding but hugely well-funded investors for attractive equity offerings.
IPO demand internationally tends to ebb and flow in cycles. When that cycle is positive, as is the case now, companies discover a ready market for well presented investment cases. When the IPO market tightens, even the best management stories can struggle.
I suspect 2014 will be a busy phase across global equity markets in this context and all Irish companies should be alive to the opportunities to finance their growth plans.
Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.