Table of Contents
In this series, we break down the jargon and explain a popular investing term or topic. Here are the top listings.
What is this?
A company’s primary listing refers to the stock market on which its shares were first listed when it went public. It is also possible to have a secondary listing on another market.
This strategy gives a company access to a larger pool of capital, which is why so many larger companies enjoy the arrangement. Increasingly, however, the secondary listing market (typically New York) is starting to look much more welcoming than the primary listing market.
Why are we reading this now?
More British companies are keen to shift their primary listing from London to New York, where they believe their shares would be more generously valued due to the greater pool of capital available. Company bosses can also expect to benefit from higher salaries for senior executives in the US, although this reason for the move is rarely cited.
Who leaves the UK?
The latest is gaming giant Flutter, owner of Betfair, Paddy Power and Poker Stars. At this week’s annual general meeting, Flutter shareholders approved New York’s move. In its defense, Flutter can argue that it has expanded in the United States.
Value: More British companies are set to shift their main listing from London to New York
Flutter is following the lead of several others. The travel company Tui has swapped London for Frankfurt. Construction supplies company CRH and pharmaceutical company Invidior have snubbed London in favor of New York. Shell has threatened that it could be next to go.
Do you have any more plans to move?
A group of Glencore shareholders have begun campaigning to move to Sydney on the grounds that the mining group’s shares have underperformed in London.
Who loses?
These exits are obviously detrimental to London, especially as the London Stock Exchange is struggling to attract new listings to replace companies that have given up in the hope of becoming objects of desire elsewhere. Last summer the Government presented proposals to address this issue. But unless it can be resolved soon, London stock markets may be in danger. Charles Hall, of brokerage Peel Hunt, even claims that the UK market “is dying”.
Such an outcome would be particularly damaging to smaller companies that, in the normal course of events, would have made their debut on the London market.
Does this only affect London?
No. French oil major Total can say au revoir to Paris, heading to (you guessed it) New York, arguing that the transfer would help narrow the valuation gap between Total and American oil companies.
Who is to blame for this?
The London Stock Exchange has played a role. A primary listing in New York appears to offer more capital on offer from investors. But UK pension funds and institutions are also in the hot seat for not supporting UK listed companies. Stakes in such companies represent only about 4 percent of their portfolios.
