Public businesses in London are increasingly choosing New York as their preferred market for listing their shares.

Public businesses in London are increasingly choosing New York as their preferred market for listing their shares, with City dealmakers frequently fielding questions from clients wishing to relocate across the Atlantic.

CRH Plc, one of Europe's largest construction materials businesses, and Softbank-owned Arm Ltd., a gem of Britain's technological industry, both only this week reported having chosen the US over London for their primary listings. It was the most recent setback for the UK's Conservative administration, which claims it is committed to seeing London thrive after Brexit.

One senior banker claimed that shifting listings away from London has been the subject of conversation among businesses and that almost all of their customers with significant foreign income streams were exploring a change. Those with knowledge of the situation who requested to remain anonymous because they were discussing private information said that even several constituents of the benchmark FTSE 100 index are considering moving their listings to New York.

Oliver Lazenby, a partner at Freshfields Bruckhaus Deringer LLP, stated that "the trend away from London, and in particular towards New York, will undoubtedly continue" unless London can regain its status as the default financial hub.

The $27 billion gambling powerhouse Flutter Entertainment Plc, which announced last month that it was looking for a secondary US listing, is being advised by Lazenby. He also consults Indivior Plc, a biopharmaceutical firm, in its efforts to get a second US listing.

The trend of companies looking to re-list outside of London "should be a huge cause of concern to the government, both in terms of the prestige of the UK economy but also future tax revenues," said Rachel Reeves, the opposition Labour party's shadow chancellor of the Exchequer.

More than half of Flutter's stockholders were located in the UK and around a quarter in the US about four years ago. Currently, the UK accounts for less than a third, while the US has increased to 43%. This number might increase much further with a US listing.

Greater Pay with More Capital

Key factors for looking to the US include higher valuations, access to wider financial markets, and less scrutiny of CEO pay.

Several sources are posing concerns to the London market.

American buyout funds and other investors are increasingly focusing their attention on UK-listed firms in an effort to profit from the lower pound and low valuations. The loss of established listed firms is a further setback as businesses choose to remain private for extended periods of time and IPOs continue to be scarce.

According to a story in the Financial Times this week, Shell Plc officials considered shifting the company's headquarters and stock market listing from the UK to the US in 2021. Such a move would have rocked corporate Britain.

Ferguson Plc, a manufacturer of plumbing and heating equipment, changed its principal listing from a FTSE 100 firm to the US that same year.

Recently, a number of changes have been announced. The data and analytics business Ascential Plc, which is listed on the London Stock Exchange, announced in January that as part of a strategic review, it planned to separate and float its digital commerce assets in the US.

Continual Decline

During the past 16 years, the UK stock market has been getting smaller. The market value of all stocks listed on the London Stock Exchange decreased this year from a peak of $4.3 trillion in 2007 to about $3 trillion.

Another blow to the supremacy of British finance came last year when the UK lost its title as Europe's largest stock market to France. According to statistics gathered by Bloomberg, the US stock market's overall market value increased from $19 trillion to $43 trillion within the same time period, more than doubling in size.

(Bloomberg.com)