It’s not a bull run…how companies rushing to list stocks in the US stumbled: a UK group even fell 98%
The New York Stock Exchange is portrayed as a land of milk and honey where tech companies will achieve higher stock prices and be appreciated by investors.
But the idea that the United States is “tech heaven” turns out to be a myth.
Most UK companies that have floated in the US since 2012 have seen their value plummet, The Mail on Sunday can reveal.
The track records of UK companies that have listed in the US have been described as “horrendous” by City sources.
On average, company share prices have fallen by 40%, according to a study by the London Stock Exchange, and in some cases the fall is much steeper.
Iconic: Wall Street bull attracts UK businesses, but they often fail to thrive
Entrepreneurs are lured across the Atlantic by the prospect of large valuations and rules allowing founders to retain control over the voting rights of shares. However, of the 22 UK companies that have been introduced to New York in the past ten years – such as Manchester United Football Club and telecommunications giant IHS Holding – only three are trading above their floating price.
The numbers should be sobering for the series of British companies, including Cambridge-based chip designer Arm, that are avoiding the city in favor of Wall Street.
The average drop of 40 percent would be even higher if one included all of the companies that went public through a special purpose acquisition vehicle (Spac).
These include Vertical Aerospace, the flying taxi company of Ovo founder Stephen Fitzpatrick, used car dealership Cazoo and healthcare company Babylon. The combined average decline in the share price of UK-based Spacs over the past four years is just over 85%.
City great Michael Spencer said there was a lot of “speculative” money chasing hot stocks in the US and “a good number of British entrepreneurs thought they could take advantage of it”.
One of the biggest falls in recent years has been British electric vehicle maker Arrival, which has plunged 98% since a £10bn float in 2021. It is now valued at less than £100m sterling.
A senior City source said LSE research proves “the grass isn’t always greener” for UK businesses looking to list across the Atlantic. He added: ‘The US has a pretty awful record for British business and nobody really talks about it.
British American Tobacco came under pressure from one of its major shareholders last week to move its main listing to New York from London. Investor GQC Partners said it made “no sense” for BAT, which has much of its business in the United States, to remain listed in London.
This follows confirmation that chip designer Arm will snub 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.
Gaming giant Flutter has also announced plans for a secondary listing in the US and will put it to a shareholder vote next month.
London Stock Exchange Group boss David Schwimmer said earlier this month that despite reforms to Britain’s financial rules there was no “silver bullet” to turn the tide.
A leading lawyer said: “The narrative is that larger assessments are available in the United States, but it’s not for everyone.”
Observers also point out that a US listing could expose companies to the litigation culture in the United States.
Charlie Walker, head of primary equity and fixed income markets at the London Stock Exchange, said: “Data consistently shows that international companies significantly underperform their domestic counterparts when listed in the US. “
