The tease continues at Flutter, the FTSE 100 gambling firm that used to call itself Paddy Power Betfair. Having won backing from shareholders in April for a secondary listing for its shares in the US, it has now picked a venue – the New York Stock Exchange – but continues to drop hints that London shouldn’t count on retaining the primary (and more important) listing forever. “The group may pursue a primary listing in the US in due course,” said Thursday’s update.
Few would dispute that it makes sense for Flutter to get itself hooked up to the US in some form. From next to nothing a few years ago, the liberalising US market will contribute £3.8bn out of £9.7bn of group revenues this year, according to City consensus forecasts, and the proportion will only increase.
A US listing is also useful when it comes to dishing out incentives to local employees. Most FTSE 100 companies of Flutter’s size have one, and it is the 22nd largest company in the index even after the 10% fall in the share price as last quarter’s trading disappointed on the non-US front.
How about moving the primary? That’s trickier but one suspects it’ll happen at Flutter within a few years because, once started, the transatlantic drift is hard to stop when ties to London aren’t deep anyway. Flutter’s head office is in Dublin, and past acquisitions have added to the international flavour. About 42% of the ownership is US-based already. It’s not hard to imagine that figure tipping over 50% with a secondary New York listing.
The main disadvantage of switching the primary would be dropping out of the FTSE 100 and then waiting to reappear in a US index. There is also, potentially, an issue of being noticed: being worth £22bn makes you big in London, but not in the US. Neither challenge, though, looks a deal-breaker if the shareholder base is willing.
For the London market, it will all sound morale-sapping. The drain of major companies relocating their main listing is actually more of a trickle (led by Australian miner BHP Billiton and building materials group Ferguson) but they all contribute to the sense of loss of dynamism.
There are a couple of lessons for officials trying to counter the dinosaur image. First, spend less time obsessing about the absence of IPOs, or flotations. When recent arrivals include the dreadful fintech firm CAB Payments, down 80% since July’s listing, nobody’s listening.
Spend more time shouting about quiet but long-established successes such as Relx, the former Reed-Elsevier information and analytics firm that, note, makes more than half its revenues in the US. In terms of total shareholder return in the last decade, Relx is the best performer in the FTSE 100 (and now its 10th largest member) but nobody ever mentions it, despite its vague but fashionable AI credentials.
Second, stamp duty on share purchases – 0.5% in London, zero in the US – is clearly going to be a factor for firms in Flutter’s position. Yet the duty generates minimal lobbying attention versus complicated proposals around freeing up pension capital. Persuading HM Treasury to give up any receipts is a tough gig, but you’ve got to try.