Sunday 25 August 2019

Euronext completes Irish Stock Exchange acquisition

Euronext purchased the Irish Stock Exchange last year
Euronext purchased the Irish Stock Exchange last year

Ellie Donnelly & Gretchen Friemann

Pan-European Euronext has completed its acquisition of the Irish Stock Exchange (ISE) after receiving regulatory approval.

The acquisition, in a deal valued at €137m, has been described by Euronext as a "major milestone" for it in its mission to "power pan-European capital markets to finance the real economy and its long term strategy."

The ISE will now operate under the business name Euronext Dublin, with Ireland becoming one of the six core countries of Euronext.

As part of the deal, Deirdre Somers, CEO of the ISE, has been appointed as CEO of Euronext Dublin, and is to join the managing board of Euronext N.V. group.

The Dublin bourse’s entry into Euronext’s federal model comes amid a surge in trading volumes, according to Ms Somers.

On a conference call for analysts this morning Ms Somers said the volume of equity turnover at the Irish exchange is up 42pc versus the same period in 2017 while the number of equity deals has increased by 50pc.

She added that "listings are running at 15pc compared to last year" and predicted that run-rate will continue throughout the year.

Asked about the deal’s relatively swift clearance of regulatory approvals, Stéphane Boujnah, CEO and chairman of the managing board of Euronext, said talks with the Central Bank of Ireland "went extremely smoothly" and emphasised the regulator is familiar with these types of deals.

"We are not the first international group operating a financial platform" in Ireland he said.

Mr Boujnah added that the four month closing period “has been extremely useful to get to know each other and to plan for the future” and said Euronext will set out a new organisational structure, incorporating the Dublin exchange, within the “next few weeks”.

Although best known as a share exchange for domestic listed companies, the ISE was ranked as the world's number one venue for bond and investment fund listings worldwide.

Although relatively obscure, compared to share trading, there are more than 36,700 individual securities from 90 countries listed in Ireland. Those deals can be large, and internationally important. The Kingdom of Saudi Arabia listed the world's largest ever sukuk issuance in Dublin last year. The Sharia law compliant debt totalled US$9bn.

The past year also saw debt issued by companies like Ryanair, Nokia and RSA Insurance as well as governments from as far afield as Kuwait and Oman and from the Irish Government itself.

The National Treasury Management Agency (NTMA) increased the amount of Irish Government securities in issue by raising €19bn from international investors on the ISE last year.

More mainstream shares listings in 2017 included the €3.4bn AIB share flotation, the largest anywhere in Europe in the year, and initial public offerings by housebuilder Glenveagh Properties and wind energy investor Greencoat Renewables.

Euronext Dublin to be consolidated in Euronext financials starting 1 April 2018.

Last year the ISE generated €32.3m in revenue at an Earnings Before Interest Taxation Depreciation and Amortisation margin of 31.9pc in 2017.

"Euronext is uniquely positioned to welcome independent exchanges such as the ISE, now Euronext Dublin, that want to join its federal model and benefit from its single cross-country liquidity pool, its state-of-the-art proprietary technology, and its single rule book," Mr Boujnah said.

"We have a strong growth plan for our new combined Group, to strengthen our leadership in debt and funds listings, and to be the entry point for ETF growth, while generating synergies through the integration of Euronext Dublin."

"This significant extension of the federal model will also reinforce Euronext’s post-Brexit strategic position and allow the group to capture growth opportunities that arise, with a disciplined M&A approach."

Online Editors

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