Officials fear for future of Ireland’s stock exchange after US listings by two big firms

Department of Finance officials have raised questions over the future of Ireland’s stock market, warning the Dublin exchange may face “long-term decline” as two of its biggest companies take out listings in the United States.

Officials fear the departure of cement giant CRH from the Irish market and US moves by gambling group Flutter “could harm Ireland’s attractiveness” for international investors in shares, leading to a loss of trading revenues and commissions.

In a private briefing note for Minister for Finance Michael McGrath, they also said nutrition company Glanbia, insulation maker Kingspan and food group Kerry might yet be tempted to follow CRH and Flutter with US listings.

The note, released under the Freedom of Information Act, was submitted to Mr McGrath as he prepared for an April meeting with Euronext, owner of the Irish Stock Exchange since 2018.

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Euronext Dublin, whose headquarters is in Amsterdam, had previously written to the Minister asking him to intervene with CRH and Flutter to persuade them to maintain Irish listings.

Asked whether the Minister had intervened, the department said officials had engaged with Euronext Dublin and “relevant market participants” to better understand the issues impacting on Irish equity markets.

CRH will leave the Irish market in September as it prepares to join the New York Stock Exchange and seek inclusion on US indices that track market performance, moves designed to boost American investment in the company.

Flutter, owner of the Paddy Power business, has received shareholder approval to take out a stock market listing in the US but has not said whether it will leave the Irish market.

Such developments are significant for the Dublin exchange because the two companies make up about 38 per cent of the annual turnover of shares.

[ Irish stock market facing strong headwinds as companies shift primary listings ]

CRH is moving for strategic reasons, seeking a US listing to gain from increased public infrastructure funding there and higher share valuations. The US market accounts for three-quarters of its profit.

For its part, Flutter wants to take advantage of new American opportunities as US states relax gambling laws after the supreme court struck down a federal ban on commercial sports betting.

Finance officials have asked whether CRH was the “canary in the coal mine”, noting a shortage of new companies going to Dublin market with initial public offerings (IPOs) of their shares.

“The lack of an IPO pipeline and the few new listings to the Irish exchange in recent years, in comparison to London or European market peers, suggests the Irish exchange could be entering a phase of long-term decline,” the paper said.

“With CRH and Flutter representing almost c. 40 per cent of the total value of the Irish equities market, it would not be unwise to consider whether similar growth prospects, liquidity and valuation siren calls could trigger another Irish-listed company to announce a USA listing.”

The paper said Glanbia could be one “potential candidate”, saying the company’s financial reporting currency has shifted to US dollars in line with most of its revenues.

“The impact on the exchange would not be as large as with CRH, but it may open the doors for other companies to consider the strategy, like Kerry Group but particularly Kingspan.”

Asked for comment, Glanbia and Kingspan each said they had no plans to change their Dublin listing. Kerry Group did not comment.

Euronext said the challenges facing Irish equity capital markets were “not unique to Ireland” and were also confronting UK and certain European Union markets. “The larger part of Euronext Dublin’s business is debt and funds listings and it is the number 1 exchange globally for listing debt and funds.”

Department of Finance officials said they had not found any official statements on potential listing changes from Ryanair, Smurfit Kappa, Kerry Group or Kingspan. “However, it is certain that other larger companies are watching the CRH proposals with interest.”