Yahoo Finance Shell looking at “all options” on “undervalued” London listing
Shell’s chief executive has floated the possibility of the petrogiant abandoning its “undervalued” London listing.
Wael Sawan, who runs the largest company on the FTSE 100, said the embattled London exchange was an “undervalued location” as he joined a raft of global CEOs in complaining about the capital’s equity markets.
Shell, he said, was a “fantastic” investment opportunity due to its undervaluation in the interview with Bloomberg.
“I will keep buying back those shares, and buying back those shares at a discount,” he added.
Sawan is set to embark on a so-called ‘sprint’ to improve the firm’s competitiveness and profit-making.
The firm is undervalued compared to peers listed on Wall Street.
“If we work through the sprint, and we are doing what we are doing, and we still don’t see that the gap is closing, we have to look at all options.”
An exit by Shell would be a bruising and almost terminal blow for the London Stock Exchange after a torrid year in which new IPOs have dried up and a string of firms have scrapped their listings for New York.
Daniel Valentine, head of communications at the Chartered Governance Institute, said Shell’s departure would “blow a £200bn hole in the stock exchange and could kick off a domino effect.”
“This warning shot by shell should be taken very seriously,” he said.
“The government must pick up the phone and listen to what Shell is saying, the recent proposals by the Financial Conduct Authority to fix the stock market are small beer and will have zero effect.
“We urge the government to convene a meeting of City players and to take this problem seriously, the government seems to think that all markets are self-correcting, but the last decade of the London stock market has proven that theory false.”
Liad Meidar, managing partner of Gatemore Capital Management, added: “The fundamental issue is that UK public limited companies trade at steep discounts to their American and even European peers.
“This means the cost of capital in UK equity markets is much higher than in rival markets, so issuers pay more for their capital and have weaker currencies. What we need is for regulators and corporate boards to be more welcoming of take-private transactions which are typically executed at significant premiums and serve to bolster values and increase liquidity.”
Just 23 companies listed in London last year, raising around £1bn, the lowest level since just after the financial crisis, according to data from EY.
The move by the British chipmaker Arm to float in New York despite a major charm offensive by ministers and regulators was also seen as a major snub for the City.
The Treasury and regulators have been on the offensive to try and boost the appeal of the London Stock Exchange by overhauling listing rules and directing more capital into the market from retail investors and pension fund.
