The recent article “US listings often fail to spice up valuations of European groups” (Report, March 18) delivered to mind the famous Saturday Night Live skit where the commentator confused “violence” on television with “violins” on television — after which wondered what all of the fuss was about!
While the piece cited evaluation that it said would challenge the claims of some executives that a Latest York stock market presence is a sure-fire path to higher share prices, the findings actually did no such thing.
The essential error was deciding to take a look at 12 European listed firms which have “added” US listings whereas the phenomenon observed within the markets is the advance in liquidity and valuation of UK firms which have “modified” their primary listing from London to Latest York.
I even have never heard a reputable claim that simply adding a Latest York listing would in itself do anything apart from increase liquidity. And while the FT piece mentions each adding a US listing and changing the first listing, there’s such a fundamental difference between these when it comes to trading dynamics, including the potential of index inclusion and the expanded investor universe that follows a US primary listing, that the outcomes are plainly not comparable.
For the larger London-listed firms which have moved their primary listings over the past five years — CRH, Ferguson, Flutter, Smurfit Kappa being examples — the resultant higher liquidity and valuations are clear.
Even so, improved valuation and liquidity are sometimes not the fundamental drivers for firms who do move — or who’re considering moving — their primary listing to the US. Particularly, access to deeper pools of primary capital and the flexibility to issue equity for strategic purposes are more vital, especially given the collapse over the past 10 years of UK primary equity issuance. For a lot of UK primary-listed firms, particularly large global firms, the query they face, sadly, is what are the advantages of staying.
Michael Tory
Co-founder, Ondra Partners, London EC2, UK
