The Euronext Dublin committee overseeing an annual review of Iseq 20 membership was left with slim pickings earlier this month as it looked to replace Great Western Mining, an explorer with a market capitalisation of just €8 million, on the once prestigious index.
They decided to promote UK retail property group Hammerson, best known in the Republic as joint owner of Dublin’s Dundrum Town Centre and Ilac Centre, which took out a secondary listing on the Irish exchange in late 2020.
The change will take effect on Monday.
With Hammerson’s market valuation stated by the exchange’s website to be £1.47 billion (€1.7 billion), the group looks the part of an Iseq 20 component – where it will comfortably make the top 10 companies.
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Until recently there was one glaring snag: to join the Iseq 20, a company had to be incorporated, have its “centre of economic interest” on the island of Ireland – and have its main stock market listing in Dublin.
However, Euronext adopted a little-known change to its rule book last month to remove these three criteria.
“We regularly review our family of indexes and the methodologies used to construct them to ensure they remain appropriate, accurate, and relevant. The index rules of the Iseq 20 were recently revised to allow broader participation,” a spokeswoman for Euronext said in response to questions. “As part of the most recent review of the Iseq 20, Hammerson qualified for inclusion.”
With Iseq 20 inclusion options scarce, it doesn’t seem to have mattered that Hammerson shares haven’t traded in Dublin since last May, according to data on Euronext Dublin’s website. In London, home of the group’s primary listing, the stock has since soared by about 20 per cent.
Stopgap
Last month’s rule change may merely be a stopgap solution for an index created 21 years ago to showcase and provide a benchmark for investors to follow Ireland’s blue-chip public companies – along the lines of the FTSE 100 in London, Cac 40 in Paris and S&P 500 in New York.
The Irish index committee faces an even tougher task in future, with just 23 companies now listed in Dublin – down from about 60 two decades ago – and the number still shrinking.
Last year alone saw Dalata Hotel Group, owner of the Clayton and Maldron brands, and Newry-based data and analytics group FD Technologies leave the market as they were each acquired, while Datalex, Corre Energy and Molten Ventures each decided to delist. Corre Energy, a developer of renewable energy storage solutions that floated in Dublin with high hopes in late 2021, ended up succumbing to liquidation last December as it ran out of money.
Between 2023 and 2024 three market heavyweights said goodbye to the market, with building materials giant CRH, gambling group Flutter Entertainment and Smurfit Westrock (formerly known as Smurfit Kappa) dropping their Irish quotations as they moved their main listings to New York.
This sucked large trading volumes out of the Dublin market, where the average daily value of shares traded declined by a third over the two years – even as stock prices rose.
And the few years before that saw the exits of the likes of office owners Green Reit and Hibernia Reit, recruitment group CPL Resources, fuel forecourt retailer Applegreen and Yew Grove – most of whom were acquired by private equity firms.
It follows a slew of Irish companies ditching their Dublin listings in the early 2010s for the bright lights – and deeper market liquidity – of London, including the conglomerate DCC, sandwich maker Greencore, and Woodie’s and Chadwicks owner Grafton Group.
Meanwhile, many would-be initial public offering (IPO) prospects have succumbed in the past decade or so to the attractions of venture capital, private equity money and trade sales – echoing a trend that has been playing out globally over the period.
Only three companies have come to the main or junior markets in Dublin in the past seven years: Uniphar, the healthcare group that raised €150 million in an IPO in July 2019; Corre Energy (2021); and medtech firm HealthBeacon (2021).
HealthBeacon’s time on the market – like Corre Energy – would be short-lived, with the company sliding into examinership in late 2023, before being taken over by US-listed household appliances supplier Hamilton Beach Brands.
While Euronext Dublin welcomed Roscommon-based environmental software company Senus, previously known as FarmEye, in December, it is only listed on the exchange’s “springboard” market for small enterprises, Euronext Access, and hasn’t traded since early January.
Replace
Is it time for the exchange operator to do away with the Iseq 20 and replace it with an Iseq 15, Iseq 10 – or no blue-chips index at all?
After all, an exchange traded fund (ETF) created to track the Iseq 20, when it was set up, ended up being liquidated in 2020 by its manager, global financial services firm WisdomTree, as it axed a number of ETFs with low trading volumes.
Another exchange-traded fund called iShares MSCI Ireland ETF, managed by US investment giant BlackRock, doesn’t even bother to use the Iseq 20 or even that Iseq All-Share index as a reference. It tracks a broader range of Irish public companies – including London-listed drinks group C&C and Grafton and New York-quoted fruit and vegetables business Dole and clinical trials firm Icon.
While Euronext Dublin, led by chief executive Daryl Byrne, has been weathering issues in its equities market, it remains the world’s number one exchange for listing bonds and a leading global venue for fund – particularly ETF – listings.
Indeed, the debt and funds listings businesses – offering steady streams of revenues – were the main attraction when Amsterdam-based Euronext acquired the Irish exchange operator in 2018 from a group of domestic stockbroking firms.
Still, the Euronext Dublin index committee is certainly running out of options to fill all the existing slots of the Iseq 20 – with two more index components set to leave the market this year and a third in winddown.
PTSB, currently the seventh-largest company in the Iseq 20, with a market value of €1.7 billion, is on track to receive second-round takeover bids later this month.
The bank confirmed on Wednesday that Austrian banking group Bawag is one “of a number of parties” involved in the sales process. The Irish Times previously reported that Bawag and private equity firms Centerbridge and Lone Star were circling the company, which is 57 per cent owned by Irish taxpayers as a result of a bailout during the financial crisis.
Donegal Investment Group (DIG) said earlier this month that its “current intention” is to delist from the Irish stock market by the end of August, having returned almost €112 million to investors over a decade after selling most of its assets.
The company, which went through an IPO in 1997 under the name Donegal Creameries following the tie-up of several dairy co-ops, became a cash shell under the rules of Dublin’s junior Euronext Growth market after recently selling its seed potatoes business IPM to Netherlands-based Royal HZPC Group for €13.9 million up front. A further €2.4 million will be held in escrow for two years.
DIG plans to return €15 million of its current €16.4 million of cash to shareholders in June by redeeming more than three-quarters of each investor’s remaining shares, it said in a shareholder circular issued in recent days ahead of its annual general meeting on March 27th.
Alternatively, the company could remain listed if it completed an acquisition constituting a reverse takeover within 12 months of completing the IPM sale last month. However, there is no indication that any such deal is in the offing.
Meanwhile, the stock market days of Malin Corporation, the life sciences investment company that floated just over a decade ago, are also numbered. Malin’s net assets fell by 80 per cent last year to €38.6 million – a third of which was made up of cash – as it continued to sell off stakes in investee companies and return surplus money to shareholders.
The Euronext spokeswoman said, however, that the exchange operator is not currently reviewing the number of constituents of the Iseq 20.
The rule changes that have seen Hammerson – whose Irish assets also include half of the Pavilions shopping centre in Swords and a landmark redevelopment project centred around the old Carlton Cinema in Dublin – elevated to the Iseq 20 came too late for another overseas company with far deeper Irish roots.
Diageo, owner of the Guinness, Smithwicks and Bailey’s brands, dropped its listings in Dublin and Paris two years ago – while maintaining its main quotation in London and a secondary one in New York – following a review of trading volumes, costs and administrative requirements.
But would a spot in a little-followed index have changed its mind? Unlikely.
