We need to create the next wave of CRHs and Flutters: The future for the Irish Stock Exchange

Stung by the high-profile departure of some companies, Euronext Dublin now has a target of four to five new IPOs each year

The Irish Stock Exchange in Dublin trading as Euronext saw one new listing last year. It’s a picture that is echoed across several exchanges worldwide. The London Stock Exchange saw a drop of 49% last year with just 23 new issuers. Picture: Moya Nolan

By most measures, 2023 was a difficult year for the stock exchange at Euronext Dublin with several high-profile departures - chiefly building materials company CRH and betting company Flutter - along with a distinct lack of initial public offering (IPO) activity.

It’s a picture that is echoed across several exchanges worldwide with the London and exchanges within the Euronext Group seeing a slump in IPO activity in 2023 compared to previous years. The London Stock Exchange saw a drop of 49% last year with just 23 new issuers.

The Euronext Group - which encompasses exchanges in Amsterdam, Brussels, Lisbon, Milan, Oslo, Paris as well as Dublin - saw 64 new IPOs which is down from 83 in 2022 and 212 in 2021 which was considered a bumper year.

Of these 64 IPOs last year, Milan alone accounted for 38 new listings, while Paris had 15 and Oslo had seven. Dublin, along with Amsterdam, Brussels, and Lisbon, had one each.

Irish construction giant CRH moved its listing to the New York Stock Exchange in September. Picture: Allie Joseph - NYSE

The one new listing in Dublin last year was a company called Aquila which invests in renewable energy infrastructure.

In an interview with the Irish Examiner, Daryl Byrne, chief executive of Euronext Dublin, said Ireland “isn’t alone” as other exchanges saw “muted” IPO activity during 2023 as well but they are being proactive in engaging with companies to put a potential IPO on their radar.

The core focus for Euronext Dublin going forward is to connect with Irish companies at a much earlier stage. "Showing them all of the benefits that a listing and Euronext can deliver for them because it is a European listing,” Mr Byrne said.

“We're absolutely confident that the offering we have will deliver everything that a company needs.” He said there hasn’t been the flow of new companies coming to market than there used to be which isn’t just a problem for Euronext, it's a problem for the entire ecosystem.

Daryl Byrne, CEO, Euronext Dublin: Stamp duty “creates an unlevel playing field”. Picture: Moya Nolan

"The crux of the issue is we haven't seen that flow of companies coming through. We're in a fortunate position being part of the Euronext group because Euronext is the number one exchange in Europe for listings, so a listing on Euronext Dublin isn't just a local listing, it's actually a European listing which gives access to a broad base of European investors,” Mr Byrne said.

During 2023, Euronext Dublin saw delistings from CRH and Paddy Power owner Flutter - both of which are seeking further growth in the US. These two were among the highest-traded stocks on the Euronext Dublin platform.

CRH is looking to take advantage of growing infrastructure spending by the Biden administration while Flutter is looking to take advantage of moves by States to legalise sports betting. Flutter operates betting platform FanDuel across 21 States in the US.

In addition to these companies, Guinness-maker Diageo was also delisted from the Dublin exchange along with packaging giant Smurfit-Kappa.

In September, the chief executive of Ryanair Michael O’Leary said the company was considering moving its listings from the Euronext Dublin exchange to Brussels citing the high level of stamp duty on trades in Ireland.

Mr Byrne said for the companies that have left, Euronext delivered for them for years and this can be done for other companies.

"We need to create the next wave of CRHs and Flutters,” Mr Byrne said.

To try and address this the lack of companies coming to market Dublin exchange migrated trading of Irish stocks onto the Euronext Pan-European trading platform.

"That resulted in a significant uplift in terms of the proportion of trading taking place on Euronext Dublin compared to the London Stock Exchange because most of our stocks are dual-listed,” Mr Byrne said.

"We've made revisions to our growth market rules to really try and streamline that make our growth markets more attractive for smaller companies.” Mr Byrne said that they have their IPO Ready Programme as well and 2023 saw the largest-ever cohort of companies taking part in that.

He said in Ireland there isn’t the same culture of getting to an IPO as it is in other countries such as the US. He said it is often a later ambition for some companies.

In order to address some of the issues within the market, Mr Byne said they’ve commissioned Grant Thornton to do an analysis of the market and look at where things aren’t working and what can be done to enhance the effectiveness and the accessibility of the market.

It has established the Irish Equity Market which is looking to take each of the recommendations from Grant Thornton and develop proposals that can be presented to the Government.

“I think all of the right things are being done. Ultimately, we need to get to a point where we have four to five IPOs coming through each year,” Mr Byrne said.

One of the main issues that Euronext Dublin has been raising with the Government over the last number of years is in relation to stamp duty on stock trades. As it stands, trading Irish shares carry a 1% stamp duty which Mr Byrne said is much higher than other comparable exchanges.

According to the Department of Finance, in 2022 stamp duty on stocks and shares generated nearly €500m for the Exchequer. The amounts raised during 2023 were not yet available.

“In the UK, it's 0.5% and then when we look across the other markets, some don't even have the equivalent which is a financial transaction tax. If they do, it could be 0.1% or 0.3%. So we're completely out there by ourselves in terms of the rate of stamp duty,” he said.

Euronext Dublin has made a number of submissions to the Government calling for an abolition of this duty saying it “creates an unlevel playing field”.

It's not the silver bullet that's going to solve all of the issues in the market but it is an important factor for new companies joining but also for existing listed companies as well,” he said.

Mr Byrne said that the stamp duty has led to a “bizarre” situation with its Atlantic Securities Market (ASM). The ASM was set up 10 years ago to facilitate companies looking to dual-list in the US and complies with all regulations under the Securities and Exchange Commission.

However, under the current stamp duty rules, an Irish company listing in the US will get an exemption from stamp duty but if that company is trading on the ASM, the stamp duty will apply.

While the stock exchange part of Euronext Dublin’s business - and the high-profile departures from it - gets the most attention, it only makes up a smaller portion of its overall business. The exchange’s bonds and debt listings is the larger portion of the business and is thriving.

Mr Byrne said the equity market only accounts for approximately 30% of its business while the remaining 70% is its bonds and debt listing market where it is considered a world leader.

While the stock exchange side of Euronext Dublin gets most of the spotlight, Mr Byrne said that bonds, debts, and funds listings are a “crucially important” part of the business.

"We're the number one exchange globally for listing bonds and listing investment funds. For the Euronext Group, the bond listing business is driven from Dublin,” he said, adding that there are 55,000 bonds listed across the Euronext markets of which 80% are listed in Dublin.

"It covers all types of bonds. So it could be you know, government debt and corporate bonds, financial institutions structured products. There's a real mix. The overall business, equity markets will be around 30% while bonds and funds and other services that we provide are around 70%.” He said the customer base for listed bonds and funds is international with bonds listed from more than 100 countries.