Why UK Giants Should Think Twice Before Ditching London Listing

The sorry state of Britain's equity markets has been well-documented. Across all UK indexes there have been just three initial public offerings so far this year after over 100 de-listings in 2023. The noise that this is only the beginning is getting louder.

As my Bloomberg Opinion colleague Javier Blas wrote recently, there's a real threat of Shell Plc, with the highest market capitalization on the UK gauge, exiting, with other giants possibly following. US equity valuations make it hard to argue for staying put.

Sure, the drivers that might propel a multinational toward the world’s largest equity market apply to a scary number of major UK-listed firms. A wander down the member weightings of the FTSE 100 makes it more than an academic exercise.

where the action is

But for most, chasing a US listing could amount to little more than a reach for fool’s gold. Of 23 British firms that have raised over $100 million in the US in the past decade, six have delisted and 13 were trading lower than the prices at which they listed as of mid-2023, a London Stock Exchange official warned investors last year. And there’s no guarantee that big, liquid stocks like Shell will get a bump from a narrowing of relative discounts to comparable US-listed companies. What’s more, the move itself is expensive and complicated; it takes ages to switch primary listings, particularly if changing domicile and headquarters.

So let’s consider the arguments. Remember, it's up to the shareholders, not where management sees greater rewards. So what should be on the agenda to decide whether to stay or go?