{"id":46357,"date":"2025-09-27T08:04:09","date_gmt":"2025-09-27T08:04:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/46357\/"},"modified":"2025-09-27T08:04:09","modified_gmt":"2025-09-27T08:04:09","slug":"kingspan-chases-magnificent-seven-energy-with-plan-to-float-unit-riding-on-ai-boom-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/46357\/","title":{"rendered":"Kingspan chases Magnificent Seven energy with plan to float unit riding on AI boom \u2013 The Irish Times"},"content":{"rendered":"

Fed up with Kingspan<\/a> shares drifting behind peers and the wider market, Gene Murtagh<\/a> is seeking to tap into some of the energy of the Magnificent Seven (Mag-7), the US tech stocks that have driven a three-year bull run across global equity markets. <\/p>\n

The Kingspan chief executive revealed on Tuesday that the insulation giant founded 60 years ago by his father, Eugene, plans to float 25 per cent of its advanced building systems unit Advnsys, which is focused on supplying the global data centres boom, in Amsterdam. <\/p>\n

The mushrooming of data centres<\/a> has been turbocharged by the artificial intelligence<\/a> (AI) revolution that has driven the share prices in recent times of Mag-7 stalwarts such as chipmaker Nvidia, Microsoft, Google-parent Alphabet and Meta, owner of Facebook and Instagram. <\/p>\n

Close to $7 trillion (\u20ac6 trillion) will need to be spent on data centres globally by 2030, driven by demand for hubs equipped to handle AI processing loads, McKinsey<\/a>, the management consultancy firm, estimated in a recent report.<\/p>\n

\u201cWe\u2019re acutely cognisant of the fact that relevant sector peers \u2013 and these are not building sector peers, they\u2019re tech-end peers that are supplying the data centre market \u2013 are trading at and above 20 times Ebitda,\u201d Murtagh said on a call with analysts, referring to how others in the data centre space are being valued by the stock market at more than 20 times earnings before interest, tax, depreciation and amortisation. Valuing Advnsys along these lines would give it an initial market capitalisation of at least \u20ac6 billion. <\/p>\n

[\u00a0Kingspan shares soar on potential \u20ac6bn flotation of unit riding data centres boomOpens in new window<\/a>\u00a0]<\/p>\n

Kingspan had lost more than a third of its market value in the four years before the move was announced \u2013 and was down 21 per cent on the year as it grappled with what Murtagh recently described as an ongoing \u201cpretty unforgiving environment\u201d for construction suppliers globally as households and businesses fret about a potential recession. The group is trading at about 10 times Ebitda \u2013 compared with its 10-year average of 13.5. <\/p>\n

Compare that with Vertiv, an Ohio-based provider of critical infrastructure and services for data centres, whose stock has soared more than 400 per cent over the past four years. <\/p>\n

Or with Trane Technologies, the Swords-headquartered but New York-listed maker of heating and cooling systems for commercial buildings, whose market value has more than doubled in the same period, to $90 billion, amid a surge in demand for its data centre air-cooling systems. <\/p>\n

\"\"The NFL comes to Dublin: How it became the richest sports league in the world<\/p>\n

The AI boom \u2013 like red-hot stock market trends before it \u2013 has attracted blatantly cynical pivots and rebrands from companies trying to jump on the bandwagon. <\/p>\n

But Kingspan has been a supplier to the data centres market since before Murtagh became CEO 20 years ago. The new Advnsys unit being lined up for an initial public offering (IPO) \u2013 which combines its data centre solutions and light, air and water businesses into one \u2013 is a world leader in bespoke critical infrastructure primarily focused on data centres, ventilation and daylighting.<\/p>\n

[\u00a0Kingspan trades profit for position in US roofing raceOpens in new window<\/a>\u00a0]<\/p>\n

While about 40 per cent of Advnsys\u2019s earnings currently come from providing infrastructure to the tech sector, particularly to data centres, this is expected to grow to about 75 per cent of an even bigger business in the next three to five years, according to the group. <\/p>\n

Citigroup analysts reckon the subsidiary could more than double its revenue and Ebitda between 2024 and 2030, to \u20ac3.2 billion and \u20ac525 million, respectively. <\/p>\n

Shares in Kingspan jumped as much as 13.5 per cent to \u20ac74.85 on Tuesday morning, but have since handed back almost half their gains as some analysts urged caution. <\/p>\n

\u201cWhile we understand the [market] reaction, particularly in light of the stock\u2019s weaker performance year-to-date, we do not yet understand how a partial IPO creates additional value, nor how the market will arbitrage valuation between the two businesses,\u201d said JP Morgan analysts led by Elodie Rall in a note to clients. <\/p>\n

Advnsys may attract a higher valuation multiple, but this is likely to be offset by the market giving the rest of the business \u2013 comprising insulated panels, other insulation solutions and its roofing and waterproofing unit \u2013 a lower one, she said. <\/p>\n

[\u00a0Kingspan plans \u20ac650m share buy back as half year revenues rise 8% to record \u20ac4.5bnOpens in new window<\/a>\u00a0]<\/p>\n

Bernstein\u2019s Pujarini Ghosh said the market excitement earlier in the week had been \u201coverdone\u201d and her \u20ac70 price target on the group points to almost 3 per cent downside from here. A listing of Advnsys in New York \u201ccould potentially have helped unlock greater value given the business mix will be more heavily skewed to the US\u201d, she said.<\/p>\n

About 45 per cent of the unit\u2019s business is exposed to the US, but this is expected to rise well above 50 per cent in the coming years. <\/p>\n

Murtagh said the decision to float on Euronext Amsterdam is down to the high level of trading in stocks in that market, a lack of stamp duty there, too, and how the same accounting standard (IFRS) applies to companies in the Netherlands and Ireland. <\/p>\n

For sure, the level of trading in Euronext Dublin has slumped over the past five years amid a number of company exits and a dearth of fresh IPOs. <\/p>\n

[\u00a0How Kingspan stands to benefit from AI boomOpens in new window<\/a>\u00a0]<\/p>\n

But to avoid the 1 per cent stamp duty applied to share trading in Irish companies, Kingspan will need to incorporate Advnsys as a public limited company \u2013 or naamloze vennootschap (NV) \u2013 in the Netherlands. <\/p>\n

A nice bonus from the planned IPO is that it would, according to Murtagh. leave both Kingspan and Advnsys \u201cessentially with zero debt\u201d \u2013 giving them plenty of scope to invest and grow by acquisition. <\/p>\n

Whereas Kingspan\u2019s share price tends to move with the broader construction industry cycle, Advnsys\u2019s stock will be far more sensitive to developments in AI, making it potentially much more volatile. <\/p>\n

Chinese tech group DeepSeek, for example, showed the world earlier this year that its approach to generative AI needs just a fraction of the computing power of more prominent US tools, such as ChatGPT. Could demand for data centres decline as AI systems become more efficient?<\/p>\n

One thing\u2019s for sure: savvy investors in Advnsys in Amsterdam will have alerts set for anything coming from another company 9,000km away. For now, Nvidia in Santa Clara, California, remains the bellwether for all things AI. <\/p>\n","protected":false},"excerpt":{"rendered":"Fed up with Kingspan shares drifting behind peers and the wider market, Gene Murtagh is seeking to tap…\n","protected":false},"author":2,"featured_media":46358,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[220,218,219,5691,34241,61,60,18253,5151,233,80],"class_list":{"0":"post-46357","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-data-centres","12":"tag-gene-murtagh","13":"tag-ie","14":"tag-ireland","15":"tag-kingspan","16":"tag-netherlands","17":"tag-nvidia","18":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/46357","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=46357"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/46357\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/46358"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=46357"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=46357"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=46357"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}