Floating On The IEX

A company can raise capital in a number of ways; for example, by

private offers of shares for subscription, by borrowing or by using

retained profits. Another way a company can raise capital is by way

of public offers of shares on a stock exchange. Floating enables a

company to maximise its exposure to prospective investors in

national and international markets.

The Irish Stock Exchange launched the Irish Enterprise Exchange

(the "IEX") on 12 April 2005. The IEX is an exchange

facility designed primarily for small- to medium-sized companies.

The exchange is a vehicle whereby businesses, and particularly

relatively new companies, can raise finance. One could be looking

to raise anything from as little as €2 million to as much

as €100 million from a flotation.

The IEX is classified as a Multilateral Trading

Facility under the Markets in Financial Instruments Directive

(Directive 2004/39/EC) ("MiFID"). By contrast, the main

market (the "Official List") of the Irish Stock Exchange

is classified as a Regulated Market under MiFID. The most

significant difference between a Multilateral Trading Facility and

a Regulated Market is that in the case of a Multilateral Trading

Facility, there are less specific requirements with regard to the

issue of the prospectus, the publication of the interim and annual

figures and the publication of price-sensitive information.

A higher degree of investment risk tends to be attached to small

to medium-sized companies in comparison with larger more

established ones. Despite this, however, securities admitted to the

IEX are subject to the IEX Rules for Companies (the "IEX

Rules") which provide a less onerous regulatory environment

for companies to operate in when compared with the listing rules

for officially listed companies. Having said that, floating and

operating on the IEX still requires strict compliance with the

provisions of MiFID and the Prospectus Directive (Directive

2003/71) (as amended).

When it launched the IEX, the Irish Stock Exchange was

attempting, firstly, to mirror the success of the London Stock

Exchange's Alternative Investments Market ("AIM") as

a trading platform for small and medium companies and, secondly, to

stem the flow of small and medium sized Irish companies to the UK

in search of listing on AIM. The IEX's attempts here have met

with limited success. While some companies may for a variety of

reasons (relating to the nature of the product or service on offer

or the perceived target market for that product or service) make a

conscious decision to remain loyal to, and, indeed, to exploit, the

Irish market through the vehicle of the IEX, the fact remains that

in international markets whose delineations are ever diminishing

and growing more vague, the priority of raising substantial capital

will usually result in an initial flotation on London's AIM or,

perhaps, at least a dual listing on AIM and IEX.

Advantages of the IEX

The IEX offers small to medium-sized companies a number of

advantages:

Access to investment capital;

Companies who are listed on the IEX are attractive to investors

for many reasons including the opportunity to improve the liquidity

of shares and enable shareholders (particularly existing

institutional investors) to realise part of their investment;

An IEX listing enhances the status, corporate profile and

capital base of the company;

Shares can be used as a form of currency, therefore avoiding

the need to resort to working capital or additional debt

finance;

IEX combines the benefits of a public quotation with a more

flexible and less stringent regulatory environment. Companies

trading on the IEX follow the IEX Rules as opposed to the extensive

regulatory regime in place for companies trading on the main market

of the ISE; and

The IEX Rules have been designed specifically for smaller

companies and are complementary to the AIM admission rules in the

UK, thereby allowing Irish companies the option of coordinating

admission to both markets using the same timetable and essentially

the same admission document therefore reducing the time and costs

involved in listing on both exchanges.

Irish companies considering applying to the AIM should consider

a dual listing on the IEX for many reasons including gaining

'home market advantage' and increasing the company's

visibility to institutional and retail investors.

Steps Involved in Floating on the IEX

It can often take up to two years for a company to fully prepare

itself for flotation. However, the flotation process itself

generally starts more than a year before the expected date of

admission to the IEX. A very rough and ready timeline to the key

steps involved in the admission process are as follows.

Step 1: Twelve months and more before admission

Appoint advisers (for example an IEX adviser (see below),

solicitors, corporate financiers, etc.) and...