30th Jan 2024 13:33
(Alliance News) - Flutter Entertainment PLC this week became the latest large-cap stock to size up a primary listing move away from London, in a move that analysts believe makes sense because of its growing presence in the US.
That will be scant consolation for the London market, however, as its flagship FTSE 100 index looks set to lose another constituent.
The Paddy Power owner, whose shares began trading in the US later on Monday, believes the New York Stock Exchange is "now the optimal location" for a primary listing. A switch to the NYSE "should be made as soon as practicable", the FTSE 100 listing added.
It will put a proposal forward to shareholders at its May 1 annual general meeting. If backed, the switch could take place late in the second quarter or early in the third.
"Following transition, the board intends to retain Flutter's UK listing as a secondary listing and believes this will ensure the greatest number of investors will be able to continue to hold Flutter shares and benefit from future value creation," Flutter added.
"Since February 2023, management has engaged widely with US investors, existing and potential, along with existing shareholders globally. The feedback received has been very supportive of moving Flutter's primary listing to the US."
Though it plans to retain a UK secondary listing, the move will mean the FTSE 100 loses its biggest gambling firm.
The London Stock Exchange, which has struggled to attract sizeable new listings, has also suffered a string of high-profile transfers of primary listings. Building materials firm CRH PLC moved its primary listing to New York in September. Plumbing and heating products supplier Ferguson PLC did the same in May 2022, months after miner BHP Group Ltd shifted its main listing to Sydney.
Jefferies analysts believe Flutter's US division will be its largest in 2026 and its biggest profit generator by 2030.
"This context explains the motivation for a US listing. Other benefits will almost certainly accrue, including: Access to a wider investor base; more passive investor interest if entry to US indices is achieved (domicile debate?), plus less of an ESG filter; potential demand from US retail investors; greater brand recognition," analysts at the investment bank commented.
Edison analyst Neil Shah said the move is not a surprise and, on the London angle, wondered if it would encourage some listing reform.
Edison analyst Neil Shah commented: "That Flutter has upgraded its love affair with the US markets to fully-fledged relationship is no surprise given that its US operations are a significant part of its business and the soon-to-be primary source of its profits. Yet London's role as jilted partner continues, with yet another company leaving its embrace on the promise of higher valuations and deeper pools of capital in the US. Certainly, the easing of sports betting regulation in the US, coinciding with heavier regulation in the UK, is a major factor in the scramble for US market share.
"However, that a top 20 company has chosen to depart the City, with Flutter's secondary listing status excluding it from FTSE 100 inclusion, follows a very worrying and very public trend of listed companies losing trust in the City, which must prompt the government to turbo-charge its listing reforms."
By Eric Cunha, Alliance News news editor
Comments and questions to newsroom@alliancenews.com
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Flutter Entertainment