More and more UK companies might be touting the lure of deeper capital markets in New York, but few have found success overseas.
(Bloomberg) — More and more UK companies might be touting the lure of deeper capital markets in New York, but few have found success overseas.
Over the past decade, 22 UK companies have listed in the US market, with only three still trading higher, and four of them have since delisted, according to BNP Paribas SA. Data compiled by Bloomberg arrives at similar figures.
“Life as a foreign private issuer in the US is not a straightforward one,” said Tom Snowball, head of equity capital markets for the UK at the bank.
The lure of deeper capital in the US and the possibility of a higher valuation has sparked a shift away from London. Softbank-owned Arm Ltd., Britain’s homegrown tech star, is among recent companies to have picked New York for their main listings ahead of the City.
Even some members of the benchmark FTSE 100 index are thinking about transferring their allegiance to Wall Street, Bloomberg News has reported. Dublin-based CRH Plc, one of Europe’s biggest building materials companies, said last month it plans to move its primary listing to New York from the UK, while Oxford Nanopore Technologies Plc, which only listed in London about 18 months ago, has said it would consider a foreign quotation.
Not for All
Still, an American listing may not be for all, bankers warn. “Only about 5-10% of UK IPO candidates realistically have a choice between New York and London,” said Andreas Bernstorff, who heads equity capital markets at BNP Paribas. “For the vast majority, a local listing is the only option.”
“We’ve got to look at this on a case-by-case basis,” Bernstorff said. “It generally only makes sense for companies that have strong revenues in the US or other sustainably strong links to the region.”
Companies without such a solid track record, that crossed the Atlantic via blank-check listings, have certainly faltered. Health-care app Babylon Holdings Ltd. and online car-sales platform Cazoo Group Ltd, which both took that route to public markets, are both down by about a whopping 98%.
Exodus Threat
Faced with the threat of an exodus, the UK government has stepped up efforts to boost listing activity by tweaking rules to put the City on an equal footing with its American counterpart. But those changes are yet to bear fruit.
Just three tiny firms have listed in London so far this year, raising only about $14 million combined, the lowest since at least 2009. That far outpaced a decline across the pond, according to data compiled by Bloomberg. While it remains to be seen if new firms join the British market, even holding onto its existing listings would increasingly look like a win for London.
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