Attracting investors is always a challenge

‘Supporting companies to scale is key to enabling future Irish economic growth’ says Orla O’Gorman, Head of Equity Listing at Euronext Dublin.

28th October, 2020
Attracting investors is always a challenge

What's your name?

Orla O’Gorman

What position do you hold?

Head of Equity Listing at Euronext Dublin and a member of the Euronext global listings team.

What are your day to day responsibilities?

I am responsible for managing our relationship with Euronext Dublin listed companies as well as working with companies looking to list on Euronext markets. I also lead our strategic financing programme, #IPOready, which provides executives in high-growth companies with the required skillset for raising strategic finance and accessing the capital markets.

My role is centred on connecting local companies to global capital markets in order to fund and accelerate innovation and growth. I am a member of the Alliance for Innovation Driven Recovery and the European Commission’s Technical Expert Stakeholder Group on SMEs.

How do you see the current situation affecting capital fundraising for businesses?

The current environment is certainly having an impact on fundraising, however there are ssignificant pools of capital available. At the start of the crisis funders initially focused on providing funds into existing portfolios before assessing new opportunities. It is fair to say that since then new opportunities have been funded but the bar is probably a bit higher now. In the current environment funds will flow to those who can demonstrate leadership, pragmatism, innovation and resilience at this time.

When might the IPO market recover?

The IPO market had a good start in 2020, however at the start of the crisis there was minimal activity, this has since recovered, with increased IPOs in technology, healthcare and cleantech sectors leading the way globally. 2020 activity in subsequent fundraisings on the market has been really high, Irish based companies alone have raised >€2bn year to date. The ability to raise funds quickly and efficiently by listed companies in the current environment has shown the real value of having a stock market listing and thus has put it back on the agenda for companies to consider for their strategic financing requirements.

What are some of the new challenges growth-stage businesses encounter when they are on the lookout for new investors?

Attracting investors is always a challenge so it is important that business executives ensure that they take the time to prepare their company and investment story well so that they make the most of their meetings with potential investors. Additional challenges at this time include inability to always engage with investors face to face, this can make negotiations harder, and the challenges of predicting future growth give the current environment including Brexit uncertainties.

Companies seeking investment should have a clear understanding of (i) how much capital they need; (ii) what they need it for – expansion / M&A / strengthen balance sheet; (iii) what is the right source of funding to deliver to their ambitions; and (iv) who is the right provider of that finance. It is critical that companies get this right, so they are funding their business with the right mix equity and debt and with the right funding partners.

Investors want a concise investment pitch that gives them enough information to understand (I) what you want their money for; (ii) how you will use it to create value and grow your business; and (iii) how they can value it.

Factors for success when engaging with investors are (i) a good investment pitch with sustainable growth and profitability; (ii) a strong appropriately funded balance sheet and (iii) an experienced management team to execute the strategy.

What can the government do to attract private capital investment in firms and make equity financing easier to access?

Supporting companies to scale is key to enabling future Irish economic growth. Research shows that providing access to equity finance enables companies to scale faster and invest in innovation. In particular, given the current environment with the combination of the Covid pandemic and Brexit uncertainties, a strong policy response by the Irish state to enable Irish companies to raise finance and to incentivise Irish citizens to invest in them is required. This will accelerate the creation of strong indigenous enterprise, rooted in Ireland, with IP in Ireland and passing leadership skills to the next generation. They are the key to our future.

We need to improve access to financing in particular for start-ups, SMEs, and young companies with innovative growth plans. We believe that in addition to amendments to EIIS (as proposed by the Alliance for Innovation Driven Recovery) that the introduction of a ‘retail investment’ products like PEA-PME in France, PIR in Italy, VCT in UK, or ASK in Norway would work well in Ireland. These measures enable investment in SMEs, stimulate an equity culture and incentivise those with excess cash to support scaling enterprise rather than investing in other asset classes, such as property. Enterprise Ireland and the Ireland Strategic Investment Fund both play a key role in funding Irish enterprise. However, matching funds are needed and we need to mobilise private capital to engage with this.

In addition, receiving funding from local partners ensures that businesses remain committed to Ireland. Currently they are increasingly pushed to look internationally at the expense of gradually losing their shareholder and management independence to pursue their investment strategy.

An active and willing pool of investors is paramount at all stages of a company’s development. Such enabling investment schemes would provide the required capital for startups and SMEs to continue to grow, while remaining independent, hence able to remain based in Ireland whilst promoting qualified employment, innovation skills and capital gains for the country. Euronext is committed to working with Irish Government departments to achieve a long-term strategy to enable and support the funding of Irish enterprise.

What’s next for your company?

Euronext operates rates regulated exchanges in Belgium, France, Ireland, The Netherlands, Norway and Portugal. We have recently entered into an agreement to buy Borsa Italiana which is a really exciting development for our federal model. Since the Irish Stock Exchange, now known as Euronext Dublin, joined the Euronext Group we have seen positive increases in the trading of shares in our listed companies, the numbers of investors they are connected to and in the supports and services we can offer them. Euronext listed companies trade on a single orderbook so it will be fantastic to add Italy to our franchise.

Orla will be speaking at the virtual Raising Capital Summit on Nov 4th

For more details see www.capitalsummit.ie

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