The J.P. Morgan logo sign on the entrance of a glass office building in Midtown Manhattan, New York, USA on 23 January 2020. -- European companies that relist in New York tend to see improved valuations, in part due to the prevalence of passive investing in the U.S., according to an analysis by JPMorgan Chase & Co.
Building material firm CRH Plc, infrastructure company Ferguson Enterprises Inc. and industrial gas firm Linde Plc have seen their discount to U.S. rivals narrow by 15 per cent, on average, since one year before completing their listing changes, the bank said in a note to clients. “Commonly cited reasons for international companies choosing to list in the U.S. include the benefit from greater market depth, and a broader investor base,” said the team led by Mislav Matejka. “Another advantage is that U.S. companies enjoy a higher level of passive investment capital due to the popularity of ETFs and index funds,” they wrote.
To be sure, the re-listing benefit is not immediate. More recent examples such as online betting firm Flutter Entertainment Plc and Italy’s CNH Industrial NV, have seen their discounts to U.S. rivals widen since making the switch, JPMorgan added. The analysis follows London suffering several blows to its reputation as a listing venue after several companies opted to move to New York. Alongside higher valuations, New York is viewed as having a more-favorable executive pay environment.