Dáil Éireann debate -
Thursday, 18 Feb 1993

Vol. 426 No. 3

Written Answers. - Equity Capital.

Peadar Clohessy

Question:

42 Mr. Clohessy asked the Minister for Enterprise and Employment the initiatives, if any, he intends to take to make available to Irish industry substantially more equity capital at rates comparable to our European partners; and if he will make a statement on the matter.

Minister for Enterprise and Employment (Mr. Quinn)

The provision of equity for Irish industry is primarily a matter for the markets in the first instance. The inflow of equity will be determined by the profitability of Irish industry which in turn is a function of the total environment within which Irish industry has to operate as set out in the Culliton report. In this context I would like to reiterate the Government's commitment, as set out in the Programme for a Partnership Government, to strengthening Ireland's industrial scientific and exporting base in line with the recommendations of the Culliton report.

I am aware of the need to increase the supply of equity to indigenous industry to aid its growth potential, and share the view of the Industrial Policy Review Group, the "Culliton" Group, as regards improving the supply of equity capital for Irish industry. In this context the Programme for a Partnership Government 1993-1997 sets out the Government's intention to extend the business expansion scheme for a further three years and to abolish the existing £75,000 lifetime cap on personal investment. The Programme for Government also makes provision for the establishment of employee investment funds to act as a supplementary source of capital for small and medium sized enterprises.

I would also mention other valuable initiatives to improve the supply of equity for industry such as the establishment in Ireland in 1991 of an EC backed Seed Capital Fund under the Industry Operational Programme and the recent establishment of the Special Investment Accounts, SIA's, which will be taxed at 10 per cent, and which will encourage a greater flow of investment into Irish equities. The level of equity taken in industrial projects by the IDA and the number of companies in which they have invested have also increased significantly during the past few years. It is an objective under the December 1990 Review of Industrial Performance to shift the form of State aid to companies, such that up to 50 per cent of support for indigenous industry is in the form of equity or other remunerating forms of funding.

Recently my Department completed a survey of the equity needs of Irish industry. The conclusions arising from this survey are under consideration at present with the aim of bringing forward a number of additional proposals for the provision of an increased supply of equity funding for Irish industry, in particular to manufacturing SME's.

In addition, and whilst not strictly equity capital, the funding of the county enterprise partnership boards will include approximately £100 million from financial institutions in favourable loans to developing companies. I am hopeful, therefore, that these initiatives will contribute to the improved availability of equity capital for Irish industry.