CRH, the world’s largest build materials company, is moving its listing from London into New York to give a boost to the UK capital market.
This company, with a market capitalization of nearly PS30bn is the latest UK-listed company that has made the move to New York. Ferguson, a plumbing and heating product supplier, left the FTSE 100 last year after it moved its primary stock exchange listing to Wall Street. Flutter, the largest publicly traded gambling company in the world, is also considering a US listing.
It been reported earlier this week that Shell’s top executives considered moving the Anglo–Dutch energy company to the US.
CRH stated on Thursday that it would recommend for shareholders a change of its primary listing to the US by 2023. It stated that North America represented approximately three-quarters its earnings and would be a major driver of future growth.
“Our exposure to the market is likely to rise further driven by substantial increase in infrastructure financing, a renewed drive to onshoring manufacturing activity and significant under-builds in the residential construction industry,” CRH stated.
Analysts believe that CRH would be able to get a better valuation in the US and more shareholders access to its largest market if it switches to the country. UBS stated that a US listing could result in multiple re-ratings, as US peers trade at roughly 25x the price of earnings, CRH trading at 13x.
CRH shares rose more than 9 percent in London’s early trading.
CRH has a London primary listing from 2011, and also has a secondary listing for Dublin, where it is headquartered. The company didn’t say what its plans were for Dublin.
David Schwimmer, chief executive at the London Stock Exchange, was asked about Thursday’s move. He stated: “If companies will make decisions when most their business is in America, that is what it is.”
A wave of takeovers in the tech sector has hit London’s market. This could further deprive it of large-listed companies like Aveva, Micro Focus, Kape Technologies and cyber security firm Avast. To access greater capital pools and more specialist financial services, some companies choose to list shares in the US, especially in the tech sector.
CRH informed analysts during a presentation on Thursday, that it sees the potential for further growth in America given President Joe Biden’s Infrastructure Investment and Jobs Act. This will fund road construction and telecommunications infrastructure. The company wants to use US shares to finance its M&A strategy.
CRH is involved in large-scale construction projects throughout Europe and the USA, including London’s Crossrail line as well as the HS2 railway line in Britain.