Glencore to keep its primary listing in London
The London-listed miner said on Wednesday that a move across the Atlantic would not increase value for shareholders
Glencore will keep its primary listing in London, rejecting a move to the United States for now in a rare win for the city’s markets, which have been shrinking due to a dearth of new share issues.
The London-listed miner said on Wednesday that a move across the Atlantic would not increase value for shareholders. In February, it said it might switch its main listing from London, and CEO Gary Nagle said New York was being considered.
Nagle said on Wednesday that the company had extensively researched a move to the major exchanges around the world.
He said that a move in our primary listing would not be value accretive for Glencore at this stage, having done that thorough analysis, and therefore we keep it on a watching brief, but will remain listed in London for the moment.
Asked about Glencore’s decision, Antonio Simoes, CEO at Britain’s largest investor Legal & General, said he saw pent-up demand to invest in Britain from international clients, including in London-listed companies, but that the government needed to press ahead with reforms to boost economic growth.
The more we get the country growing, the stock market will be a reflection of that, he said. We just want to see those reforms coming through, so that there’s more capital investing in the UK.
Glencore’s shares have fallen 26% in the last year, prompting analysts to suggest the company might get a boost by a relisting in New York. However, Nagle said on Wednesday that decline was due at least in part to lower coal prices
He added that the company believed it was unlikely to have been included in U.S. benchmark S&P 500 index – a point that London and other European exchanges have stressed in their campaigns to try to convince companies to list with them.
A U.S. listing is perceived to offer access to deeper pools of capital and higher valuations in certain sectors but these are often illusory, and it also comes with significant regulatory burden, litigation risk, and increased disclosure requirements as well as big challenges in gaining index inclusion, said Michael Jacobs, corporate partner at law firm Herbert Smith Freehills Kramer.