Glencore's rejection of US listing boosts UK markets

Glencore has decided to keep its main listing in London. It will not move to the United States at this time. This is a rare victory for London's markets which are shrinking because of a lack of new shares.

The London-listed mining company said on Wednesday that moving across the Atlantic wouldn't increase shareholder value. It said in February that it was considering moving its primary listing to New York from London.

Nagle stated on Wednesday that his company has thoroughly researched the possibility of moving to major exchanges in the world.

He said that a move to our primary listing would not add value for Glencore, at this time. "We keep it on a watch brief but will stay listed in London for now," he added.

This decision is a major boost to UK capital markets, after years of low valuations and few IPOs that led to takeovers. London's equity market has shrunk as companies have sought higher valuations in other markets, leading to a series of listing reforms.

Just Eat Takeaway.com, a Dutch food delivery service and travel giant TUI are among the high-profile companies that have announced their departure from London. BHP Group, world's biggest miner, will also end its dual listing to Sydney in 2022.

In an effort to attract new companies, Britain has implemented reforms that include reducing the number of shareholder votes for certain transactions and easing prospectus requirements.

When asked about Glencore's move, Antonio Simoes said that he had seen a pent up demand from international clients to invest in Britain, including London-listed companies. However, he added that the government must continue to push forward with reforms in order to boost economic growth.

He said that the stock market would reflect the growth of the country. "We want to see these reforms come through so that more capital can be invested in the UK."

Some companies, such as Pearson, who is being pressured by shareholders to move their London listings to the U.S., or Shell, an oil giant, are considering moving to the U.S. in order to close a valuation gap between them and rivals.

Analysts suggest that Glencore could benefit from a New York relisting. Nagle stated on Wednesday that the decline was at least partly due to lower coal price

He said that the company did not believe it would have made the S&P 500 U.S. benchmark index. This is a point London and other European stock exchanges have stressed as part of their efforts to convince companies that they should list on them.

Michael Jacobs is a corporate partner with Herbert Smith Freehills Kramer. He said that a U.S. list offers access to greater pools of capital, higher valuations and more disclosures. But these perceptions are often false. It also comes at hefty regulatory burdens, increased litigation risks, increased disclosure requirements and big challenges to gaining index inclusion.

Some investors, however, were still disappointed by Glencore's move. According to some analysts, it was the reason why its shares dropped 4% on Wednesday. Pratima Dasai and Charlie Conchie contributed to the reporting. Iain Withers, Additional Reporting Anousha Sakoui. Mark Potter (editing)

(source: Reuters)