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Shell has threatened to leave the London stock market in a blow to the City.
CEO Wael Sawan said the oil giant is looking at “all options,” including the possibility of moving its share listing to New York.
That would be a crushing setback for the London Stock Exchange and the wider British economy after a series of disappointments in recent years, including the listing of Cambridge-based chip designer Arm in the US instead of Britain.
Shell is the largest company in the FTSE 100 index with a value of £180 billion and is a lucrative dividend payer for British investors and pension funds.
But amid a growing focus on environmental, social and governance (ESG) issues, investors in Europe have turned against fossil fuels, with the Footsie underperforming the S&P 13 of the past 15 years 500 in New York.
Shock move: Shell CEO Wael Sawan (pictured) said the oil giant was looking at ‘all options’ – including the possibility of moving its share listing to New York
“I have a location that seems clearly undervalued,” Sawan told Bloomberg.
There are fears that Shell’s departure could prompt rival exploration giants – including miner Glencore and oil and gas group BP – to follow suit.
The loss of three such strong players – all among the largest companies in the FTSE 100 by value – would send shockwaves through the City and Westminster.
Sawan said Shell remains focused on a two-and-a-half-year “sprint” to reduce costs and increase returns for investors in a bid to boost the share price and value by the end of 2025.
He said the “gap” between the valuation of Shell shares and those of New York-listed rivals such as Exxon Mobil and Chevron represented “a fantastic investment opportunity”.
Referring to the company’s strategy of buying back shares to boost the price, he told Bloomberg: “You can worry about the gap, or you can buy the gap.”
“I will continue to buy back those shares and buy back those shares at a discount.”
But he added: “If we work through the sprint, and we do what we do, and we still don’t see the gap closing, we have to look at all options. All options.’
The threat comes as London struggles to attract new companies to the stock market at a time when others are leaving.
Peel Hunt warned last week that the “relentless” pace of takeover activity represented a “feeding frenzy” that could see more than 100 companies leave the London stock market in the coming years.
Companies are undervalued because investors look for better returns elsewhere.
About £5.1 billion has been withdrawn from UK equity funds so far this year, according to Goldman Sachs.
Hendrik du Toit, chief executive of fund manager Ninety One, said UK assets are ‘out of fashion’.
But he added that they are also “dirt cheap” and therefore a good investment. Shell shares rose 1.2 percent, or 34p, to 2814p yesterday.