Future of Irish technology index uncertain

18 Nov 2002

The future of ITEQ, the technology index of the Irish Stock Exchange looks to be in doubt following the news that two of its registered companies, Alphyra and Riverdeep, are planning to delist.

If proposed management buyouts by the two companies go ahead, the value of the index may plummet to less than €500m, raising questions about the index’s role in the indigenous technology sector.

Delisting will also further dent a reputation already seriously damaged by the abandonment of initial public offerings (IPOs) by Norkom and Spectel — both of whom were thought to be candidates for ITEQ.

Since its launch in September 2000, at the height of the dotcom boom, ITEQ has managed to accrue only eight high-tech companies, compared to the initially proposed 40.

Originally it had been envisaged that the list would fulfil the role of a tailor-made market for Irish technology companies undertaking IPOs.

It was also intended to allow fast-growing firms to speedily undertake transactions, without having to seek the approval of the shareholder.

With a current capitalisation of just €800m and a membership expected to be reduced to six, its original ambitions have had to be seriously scaled back.

Chief executive with corporate finance house, Ion Equity Neil O’Leary, believes that in the current climate, there is little justification in investing in the index:”A couple of years ago it looked as though there would be a host of companies coming out of Ireland and it would have been advantageous. But it looks like the market [in which the index was created] was a bubble.

“I think the most appropriate place for a company to list would be on a larger stock exchange such as the London Stock Exchange or Nasdaq.”

“It would be difficult to envisage a situation over the next three years that would give rise to an increase in the number of Irish stocks,” he said.

As it is, the index’s relevance to the technology sector remains questionable. If it is further depleted the issue of its function will arise again in earnest.

Other companies listed on ITEQ are Conduit, Datalex, Horizon Technology, Icon, Iona Technologies and Trinity Biotech.

By Suzanne Byrne