It’s no bull run… how firms in rush to list shares in US have stumbled
It’s not a bull run… how companies in a hurry to list shares in the US have stumbled: one UK group is even down 98%
The New York stock market is portrayed as a land of milk and honey where technology companies will achieve higher stock prices and be valued by investors.
But the idea that the US is “tech heaven” has turned out to be a myth.
Most British companies that have gone to the US since 2012 have seen their value plummet, The Mail on Sunday can reveal.
The track record of British firms listed in the US has been described by City sources as “gruesome.”
On average, the companies’ share prices are down 40 percent, according to research from the London Stock Exchange, and in some cases the plunge is much steeper.
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Entrepreneurs are lured across the Atlantic by the prospect of big cash valuations and regulations that allow founders to maintain control over voting rights. However, of the 22 British companies that have floated on the New York Stock Exchange in the last decade, such as Manchester United Football Club and telecoms giant IHS Holding, only three are trading above their share price.
The numbers should be sobering for the range of British companies, including Cambridge-based chip designer Arm, who are avoiding the city in favor of Wall Street.
The average drop of 40 percent would be even greater if the range of companies that entered the market through a special purpose acquisition vehicle (SPAC) were included.
Among them are Ovo founder Stephen Fitzpatrick’s flying taxi company Vertical Aerospace, used car dealership Cazoo and healthcare company Babylon. The combined average share price decline of British-origin Spacs over the past four years is just over 85 percent.
City grandmaster Michael Spencer said there was a lot of “speculative” money chasing popular stocks in the US and that “quite a few British entrepreneurs thought they could take advantage of that.”
One of the biggest fallers in recent years has been British electric vehicle maker Arrival, which is down 98 per cent since going public for £10bn in 2021. It is now valued at less than £100m.
A senior source at City said the LSE’s research shows that ‘the grass isn’t always greener’ for UK companies pursuing listings across the Atlantic. He added: “The US has a pretty horrific track record for British companies and no one is really talking about it.”
British American Tobacco was under pressure last week from one of its largest shareholders to move its primary stock listing from London to New York. Investor GQC Partners said it is “nonsensical” for BAT, which does a lot of business in the US, to remain listed in London.
This follows confirmation that chip designer Arm will turn down the London Stock Exchange in favor of the US. CRH, the world’s largest building materials company, has also recently set its sights on Wall Street.
Gambling giant Flutter has also announced plans for a secondary listing in the US and is putting it to a vote of shareholders next month.
London Stock Exchange group boss David Schwimmer said earlier this month that, despite reforms to UK financial rules, there was no silver bullet to reverse the trend.
A leading attorney said, “The story is that higher valuations are available in the US, but that’s not for everyone.”
Observers also emphasize that a US stock market listing can expose companies to the litigation culture in the United States.
Charlie Walker, head of equity and fixed income primary markets at the London Stock Exchange, said: “The data consistently shows that global companies significantly underperform their domestic counterparts when they list in the US.”