March 15, 2023: Analysts said that the United States is more attractive than European exchanges for the recent listings, and there is little that Europeans can do to change that.
British chip creator Arm, owned by Japan’s Softbank, stated earlier this month it witnessed to list in the U.S. this year. This is even after an intense lobbying effort from British officials to witness the firm make its market debut in the U.K.
Building materials company CRH, headquartered in Ireland, also said it would move its primary statements to the U.S., which cited “increased commercial, operational and acquisition chances.”
Both instances highlight how the U.S. stock market is attractive to the corporate world.
Roger Jones, head of equities at London and Capital, said there are two main reasons why this is the case.
“Sellers or listers can get better costs in the U.S., which still trades on significantly increased valuations than Europe. Next, a lot of the favoured sectors, and industries which have been more green companies that are looking to come to market, are major U.S. sectors, such as Technology, Bio/Med Tech and Communication =,” he said.
Northvolt, a battery maker firm out of Sweden, is still in the start-up phase but has ideas to list in the future. CEO Peter Carlsson said in February that he is acting as a dual listing, one in Sweden and one in the U.S.
“In the long run, I would see that as an opportunity,” he said.
In 2022, the data from EY showed 130 deals stateside in recent Initial Public Offerings, which started at nearly $9 billion. AlmostNf these IPOs were on U.S. exchanges.
On top of increased valuations, Caroline Simmons, U.K. chief investment officer at UBS, focuses that the U.S. offers scale that European differences do not.
She was known for the “clustering” effect highlighting the easier way to get investment when you are in a similar space as another firm within the same sector. Therefore, the tech firms such as Arm look at the U.S. for recent listings, given the amount other tech firms listed there.
Simmons said, “there’s no structural reason” why Europe cannot attract the limited listings. “But it comes back to the mass discussion,” she further states, and therefore there is not much the continent can do regarding it.