City exodus: why grass on Wall Street is not always greener

A growing number of UK companies are moving to Wall Street, attracted by the promise of outsized shareholder returns. But while some succeed, many others do not. John Ficenec looks at some of the winners and losers.

12th March 2025 08:28

John Ficenec from ii contributor

UK companies are feeling unloved and undervalued on the London Stock Exchange, and investors are becoming restless at what they perceive is lacklustre performance. The situation has become so critical there are fears of a summer exodus to the bright lights and supercharged valuations on the New York Stock Exchange. But the grass isn’t always greener stateside.

“If you take a look at the companies that have gone from the UK to list in New York over the last 10 years it’s about 20 companies. Of those 20, four are trading up, nine are delisted, and the rest are trading down by an average of over 80%,” says David Schwimmer, chief executive officer of the London Stock Exchange.

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It sounds like a pretty damning indictment of why investors should be fearful of moving their primary listing to New York, but underneath the headline figures there’s a mix of winners, losers and a more nuanced tale.

Moving to the US is not without precedent, of course, a bunch of large UK companies having already made the jump and returned gains for investors, among them Paddy Power-owner Flutter Entertainment (NYSE:FLUT), construction giant CRH (NYSE:CRH), and plumbing firm Ferguson Enterprises Inc (NYSE:FERG), formerly Wolseley. However, it isn’t a one-way ticket to positive returns - Just Eat Takeaway.com NV (EURONEXT:TKWY)’s shares were largely bombed out before it limped on to the Amsterdam exchange, where it was acquired by rival Prosus. Packaging group Smurfit WestRock (NYSE:SW) has largely gone sideways since moving to the US in July last year, something equipment hire group Ashtead Group (LSE:AHT) might want to consider after announcing it plans to move in the coming year.

Following the Magnificent 7

The US is the undisputed king of tech stocks with Meta Platforms Inc Class A (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN), Apple Inc (NASDAQ:AAPL), Tesla Inc (NASDAQ:TSLA), NVIDIA Corp (NASDAQ:NVDA) and Google-owner Alphabet Inc Class A (NASDAQ:GOOGL), among the Magnificent Seven driving performance and growth. The allure of attracting even a small portion of this stardust into a company valuation is what attracts UK companies. One of the standout winners in recent times has been ARM Holdings ADR (NASDAQ:ARM), the UK tech company that designs software for smartphone microchips. ARM snubbed the UK to list in the US at $51 per share in 2023, and before the recent market slump had rocketed to around $120, a gain of 135%.

Another tech winner has been Markit, the Dublin based financial information provider that specialises in pricing for credit insurance markets – so-called Credit Default Swaps (CDS). Markit listed in 2014 at $24 a share, then merged with IHS a few years later, and was finally swallowed up by S&P Global at around $109 a share in 2022, a gain of around 450% for investors.

However, that is where the good news ends. King Digital, the London-based owner of fantastically annoying but ever popular Candy Crush Saga game for mobile devices, listed in the US in 2014 at $22.50 a share. It was bought by rival Activision for $18 a share two years later. Endava ADR (NYSE:DAVA), the British software designer for financial, healthcare and gaming firms, listed in 2018 at $20. Despite rallying strongly to near $170 by the end of 2021, they’re now worth just $22, hardly a stellar return for shareholders. So yes, outsized returns in tech are possible in the US but they are by no means guaranteed.

Biotech biohazard

The investment returns in biotech get even more lumpy, of the 10 UK biotech companies that have moved from the UK main market to the US since 2014, only one has managed to cling on to gains. Immunocore Holdings ADR (NASDAQ:IMCR) develops treatments for cancer and autoimmune diseases. It listed in 2021 at $26 and four years later is now at around $30. The rest have either de-listed or have slumped more than 80% on average. Aim-listed pharma companies have fared better when moving to the US. GW Pharma is the standout, de-listing in 2016 at $113 per share before being acquired for $220 in 2021 by rival Jazz, while Abcam’s returns are more muted, listing in the US for $17.50 in 2020, before being acquired for $24 by Danaher.

It’s a bit unfair to say that any failures are purely because of a US listing, as these biotech companies are always high risk. Early stage biotech companies are usually cash hungry, loss-making enterprises as they develop a pipeline of treatments. The portfolio of potential treatments are usually all at different stages in the drug approval process, but if just one is approved it can provide fantastic returns.

So, the motive for a US listing has more to do with access to funding in these early and unprofitable years. There is a feeling that the US investor has a greater risk appetite and deeper pockets required to provide the necessary support. Developing new drugs is a highly speculative business, so a return of one in 10 is not unusual, with that in mind it’s difficult to see how listing in London or New York would make the difference.

Cracking the US market

Consumer-focused companies have struggled to translate success on these shores across the pond, with the US proving a graveyard for many top British brands such as Tesco and Ted Baker. Membership Collective Group, the owner of Soho House members clubs, listed in 2021 at $14, and has endured a tricky reception in the States. The shares, now known as Soho House & Co Inc Ordinary Shares Class A (NYSE:SHCO), have more than halved to around $6.50 currently.

Farfetch, the UK online luxury goods seller, listed in 2018 at $20 and soared to over $60 during the Covid lockdown, but collapsed by over 90% to $1 before being taken private by South Korean e-commerce specialist Coupang early last year.

Berkshire based Travelport, developed a successful online platform where travel agencies could quickly access hotels, car hire and airlines. The company listed in 2014 at $16 a share and was taken private at $15.75 per share five years later by Elliott Management.

Education providers have enjoyed solid growth during the past 10 years, and this certainly helped fuel Nord Anglia Education. The provider of schools across the world is headquartered in London but listed in the US in 2014 at $16. It enjoyed incredible growth before Swedish private equity giant EQT took it private for $32.5 at the end of last year.

Material world

There are far fewer examples of UK-based industrials that have listed in the US. North-East based Venator Materials is a chemical company that specialises in high-tech pigments for paint and cosmetics. It listed in 2017 at $20 after it was spun out from parent Huntsman.

The company had a difficult time on US markets as shares plunged before SK Capital purchased 40% of the company for around $2.2 per share in 2021, before rescuing the rest of the business from Chapter 11 bankruptcy in 2023. This represents a torrid time for any investors holding the shares.

Much of the talk around UK companies wanting to cross the pond recently has been around the energy and resource sector. Shell (LSE:SHEL) chief executive Wael Sawan has bemoaned a perceived London discount, and Glencore (LSE:GLEN) chief Gary Nagle said questions have been raised over whether London is the best place for the company’s valuation. And there has been pressure from investors in Rio Tinto Registered Shares (LSE:RIO) to move to Sydney in similar fashion to rival BHP Group Ltd (LSE:BHP), and also Aussie oil & gas giant Woodside Energy Group Ltd (ASX:WDS), which delisted from the LSE late last year.

However, it’s difficult to see how Shell would instantly benefit from a relocation. If there is a quick gain to be made from moving the listing to New York, then somebody might want to tell Exxon. The US oil giant sits on a low valuation rating relative to the wider market and largely tracks the oil price. On a valuation basis, Shell is trading on around 13 times earnings, while its American peer is only on a marginal premium at 13.5 times. It could be argued that Shell warrants something of a discount as it carries a higher debt burden following its takeover of gas giant BG in 2016.

Better the devil you know

Moving to the US also presents risks in the form of political interference and the famously litigious nature of American business. UK companies have received a rough ride from the US judicial system, just ask oil major BP (LSE:BP.). President Barack Obama attacked “British Petroleum”, a name it dropped a decade earlier, following the Gulf of Mexico disaster in 2010. The UK legal system may have its failings, but it also has a reputation for fairness, leaving that behind for the promise of a higher valuation, lower taxes and more funding could be a fool’s errand.

The new Trump administration has already sparked market volatility through its tariff introduction and avowedly “America First” economic policy. The new UK government presents its own set of challenges, but the changes made so far haven’t seriously impacted share prices and are within a system that UK companies know and understand.

Looking in detail at the 20 UK companies listing in the US since 2014, there is certainly no broadly compelling argument for a US listing. It could even be argued that a slightly higher tax rate and stamp duty on share purchase seems a small price to pay for the stability of the London Stock Exchange.

What the companies that have left show is that what is required is a capital market with investors who understand a company and can invest for the long term. Certainly, UK investors and boards should be careful - the grass in New York isn’t always greener than London.

John Ficenec is a freelance contributor and not a direct employee of interactive investor.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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