Euronext Dublin, the operator of the Irish Stock Exchange, has called on Finance Minister Paschal Donohoe to introduce tax incentives for entrepreneurs to boost IPOs in a market where IPOs have followed global trends since the crash financial.

In a submission to the government ahead of the 2023 budget, due to be unveiled on September 27, the stock exchange operator said that while IPOs open up opportunities for companies to raise funds to grow, they should “also reward entrepreneurs “for the risk they run. take in starting a business. Most founders pay themselves “below market rates” to start a business, he added.

“An IPO may create an opportunity for founders to sell some of their shares at the time of the IPO or at a later date after a lock-up period. Having appropriate tax incentives to allow founders to sell some of their holdings could help spur IPOs,” said Euronext Dublin, led by chief executive Daryl Byrne. “The majority of founders will have paid themselves below market rates, while starting the business on many years.”

Euronext Dublin said that a measure such as the reduction of capital gains tax for entrepreneurs or founders selling part of their holdings “in connection with an IPO and/or in staggered elements in subsequent years would be beneficial and would be an important decision factor for founders choosing between an IPO, commercial sale or other form of financing”.

Tax credits

The submission also called for the introduction of a tax credit scheme to reduce the costs of access to public procurement for Irish small and medium-sized businesses.

“For smaller SMEs, the cost of issuing can be as high as 15% of capital raised through listing, making IPOs an unattractive way to raise new money. [in particular compared to other alternative sources of financing, such as private equity]said Euronext Dublin.

“To help enhance the attractiveness and accessibility of Irish public procurement for Irish businesses, in particular SMEs, we consider it would be beneficial to introduce a tax credit scheme for expenses incurred by a business as part of its IPO process.”

Euronext said a tax regime could be capped at €1 million and applied to companies with a market value of less than €500 million at the time of the IPO. Sweden, Italy and Hungary currently have such commercial incentives, the communication notes.

Euronext Dublin said the costs of the tax incentives “would be very low for the Treasury, while the benefits would be considerable, particularly given the potential contribution of newly listed Irish companies to the continued growth of national employment and employment. ‘Irish economy’.

Global trends

The Irish stock exchange’s IPO activity has followed global trends on a bull run in international equities over the past decade, with its pipeline mainly rescued by the post-crash IPOs of four funds real estate investment company (of which only Ires Reit remains listed), two home builders, and AIB’s return to the main stock market in 2017.

Corre Energy, a renewable energy storage company, and HealthBeacon, a medical technology company, were the only Irish stock market listings in 2021, in an otherwise record year for IPOs globally, during of which a total of more than 600 billion dollars (599 billion euros) have been raised.

Meanwhile, exits from the Irish market have continued over the past two years, with the acquisition of companies such as recruitment firm CPL Resources and fuel retailer Applegreen, as well as property groups Yew Grove Reit and Hibernia. Reit.

Elsewhere, Swiss and Irish-backed commodity group Aryzta dropped its Irish listing last year, highlighting how the group’s center of gravity has shifted from Dublin to Zurich. Tullow Oil said last week it was also dropping its Irish listing, with its shares continuing to trade in London and Ghana.

Global IPOs fell nearly 50% in the first half of 2022, with the number of tech companies going public plunging 61%, according to EY, as stocks fell in value amid rising inflation, interest rates and fears about the war in Ukraine and the global crisis. economy.