British American Tobacco is going through strain to transfer its major itemizing to New York after a top-five shareholder stated it “makes no sense” for the cigarette maker to stay on the UK stock market.
Rajiv Jain, founding father of $92bn US-based funding agency GQG Partners, informed the Financial Times he had urged the administration of the FTSE 100-listed proprietor of Lucky Strike and Dunhill to name time on a London itemizing that dates again to 1912.
BAT is an “orphan in Europe”, stated Jain, who this month ploughed $1.9bn into 4 Adani Group firms after the Indian conglomerate was hit by a brief vendor assault. “The core ownership base [of BAT] has disappeared. It makes no sense for them to remain there.”
He pointed to the US-centric nature of the FTSE 100 firm’s enterprise and the valuation hole between BAT and its US-listed peer Philip Morris International, the place GQG is a top-10 shareholder, asking: “What’s the point of remaining listed in London?”
The lure of upper valuations and a deeper pool of traders within the US have sparked a string of exits from London. This month Cambridge-based chip designer Arm rejected a UK itemizing in favour of New York whereas CRH, the world’s greatest constructing supplies firm, grew to become the most recent enterprise to search an exit from London.
They adopted within the footsteps of the world’s greatest playing group, Flutter, whose shareholders will vote on a secondary US itemizing in April, with an eye fixed to presumably switching its major itemizing. Shell additionally thought-about switching to a New York itemizing, the FT reported final month, though it in the end selected a single itemizing in London.
The widening debate on the deserves of leaving the London market underlines the UK’s problem in attracting and retaining firms, and displays how a home investor base has more and more shunned its dwelling equity market. Holdings of UK-listed firms by British pension and insurance coverage funds have plunged from about half their portfolios to simply 4 per cent over the previous 20 years, in accordance to information from advisory agency Ondra.
The US accounted for about two-fifths of BAT’s £27.6bn in international revenues final yr on a continuing currency foundation, making it the cigarette maker’s greatest market. BAT’s US subsidiary Reynolds owns the favored Newport and Camel cigarette manufacturers, whereas BAT’s Vuse vape has a 41 per cent market share within the e-cigarette class, in accordance to Nielsen information.
Despite producing barely larger revenues and working income than Marlboro maker PMI final yr, BAT’s valuation lags far behind its New York-listed rival. On Wednesday afternoon BAT’s market capitalisation stood at £66.3bn, lower than half PMI’s £147.6bn.
Jain, who based Australia-listed GQG in 2016, declined to go into element about how BAT’s administration reacted to its fifth-biggest shareholder’s proposal.
However, he stated “we are a large shareholder, so they listened to us and they weren’t committal in one way or the other”.
BAT has a secondary itemizing on the Johannesburg Stock Exchange.
A BAT spokesperson stated the corporate “does not comment on its engagement with shareholders”.