Pan-European stock exchange group Euronext announced the full acquisition of shares and voting rights of the Irish Stock Exchange (ISE) for €137m.
Through the purchase of ISE, expected to close in Q1 2018, Euronext expands itself to a sixth European country, being already present in Paris, Amsterdam, Brussels, Lisbon and London.
Dublin-headquartered ISE tallies 51 listed companies with an approximative €122bn total domestic equity market capitalisation. Over 30,000 debt securities from 90 countries as well as 5,242 investment funds shares and 227 ETFs are also listed on ISE according to Euronext.
Irish Funds’ data suggests the Irish fund industry hit net new sales high at the end of August 2017 with €206bn of net new inflows recorded for the first eight months of 2017 and €2.25trn of assets under management at the same date.
For the first nine months of 2017, ISE generated €24.2m of revenue, up +13.3% compared to the same period in 2016, and an EBITDA of €8.5m, up +22.4% compared to the same period in 2016.
The full integration of ISE is expected by 2020 with total costs of around €9m for the first years of implementation.
The transaction enables Euronext to capitalise on ISE’s lead in debt and fund listings and to strengthen Ireland’s position as a major European hub to benefit from Brexit opportunities.
The move will benefit to the Irish capital markets ecosystem that will be developed within a European context. Euronext stated that Dublin will have a strong group-wide position within the group’s federal governance structure, in particular as the global centre of excellence for all Euronext’s group-wide activities in the listing of debt, funds and ETF securities.
Deirdre Somers, chief executive officer of ISE, will join Euronext’s managing board and will be responsible for Euronext’s debt, funds & ETFs listing.
Another move will see Padraic O’Connor, non-executive chairman of ISE, being proposed as a new member of Euronext’s supervisory board to the next annual general meeting of Euronext.
Moreover, ISE’s regulator, the Central Bank of Ireland, is expected to join Euronext’s college of regulators.
The integration of ISE to Euronext group will increase the Irish stock exchange’s liquidity and efficiency for issuers, members and listing customers.
Also Euronext’s acquisition of ISE will enable Dublin stock exchange to, among others, leverage the complementarity of the Irish market to the UK to deliver Brexit solutions, become a EU ETF trading hub – according to Irish Funds, 56% of all European ETFs were established in Ireland at the end of August 2017 – and develop an Irish agricultural commodity business by leveraging Euronext’s expertise.
A ‘landmark day’ for ISE
Stéphane Boujnah, CEO and chairman of the managing board of Euronext, said: “The Irish Stock Exchange joining Euronext represents a major milestone in the expansion of Euronext’s federal model since its IPO. ISE brings to Euronext leading global positions in debt, funds and ETF listings markets.
“As part of Euronext, ISE’s growth initiatives will be reinforced with Euronext’s full support. We are delighted to welcome Deirdre Somers and her team to Euronext. In addition to strengthening revenue profile and cost synergies, ISE is ideally positioned to benefit from market opportunities in a post-Brexit environment.
“Within this environment, our unique federal model clearly demonstrates its added value through a single cross-country liquidity pool, a single state-of-the-art proprietary technology, a single rule book and a complete and diversified set of services, while maintaining strong local input within our balanced federal governance. This transaction demonstrates the strength of the Euronext “united in diversity” federal model.”
Deirdre Somers, CEO of ISE, commented: ”This is a landmark day in the 224-year history of ISE and a great day for our customers and our people. This transaction recognises the significant value and leading market position that has been built by the ISE.
“More importantly, we believe that Euronext is the perfect partner to enable us to achieve our growth ambitions. Euronext is hugely complementary to the ISE, bringing valuable expertise, financial strength, global relationships and technological capability as well as a global brand.
“These will enable our business to build further on its track record of international achievement and capitalise on new market and product opportunities emerging in Europe.”