The gambling group Flutter that owns Paddy Power plans to leave the UK’s FTSE 100 Index by moving its primary listing from London to New York. This will be another blow for London’s ailing stock market.
The company announced on Monday that if shareholders approve, Flutter could move to the US Stock Exchange from the London Stock Exchange as early as this year.
A primary US listing, according to the Ireland-based gambling company, would provide “access” to “much deeper capital markets”, as well as bringing in new investors from across the Atlantic. The board intends to keep a secondary UK listing after the move, but a primary US listing is needed for inclusion in FTSE 100.
Flutter, one of FTSE 20’s top companies, has announced a value of approximately £29bn. This is yet another blow to London’s stock exchange.
Recently, several companies have chosen to abandon their existing UK listings and list on rival exchanges like New York or Frankfurt. They cite a decrease in UK equity market liquidity over the past few years as well as the possibility of higher valuations in US.
BHP, Smurfit Kappa, Smurfit Kappa Packaging, and Ferguson Plumbing are just a few of the companies that have left the FTSE 100 to list in Australia or America. Last year, British chip designer Arm listed in New York despite being lobbied to go with London.
UK pollster YouGov, and Europe’s biggest tour operator Tui are also considering cancelling London listings.
The UK government is trying to stabilize the London stock exchange through regulatory reforms, and encouraging pension funds to invest into high-growth companies that may one day list on the stock exchange.
The government also prepares a possible retail offer of NatWest shares, the bank it still owns more than a third of after it bailed it out during the 2008 financial crises.
Flutter has announced its plan to change its primary trading venue. The ordinary shares of its company debuted on a secondary listing at the New York Stock Exchange, and its secondary Dublin listing was cancelled. The shares dropped by 1.4 percent immediately following the announcement and ended down 0.9 percent.
Peter Jackson, the chief executive of Flutter, said that a primary listing in the US was the most natural choice for the company. He noted that the majority of profits were expected to be earned in the US within the next few years.
Since last February, the company, which owns Sportsbet, has been considering an initial US listing. It said that the idea received “very positive” feedback from investors and shareholders.
The unaudited revenues for its US Sports and Gaming Book rose by 26 percent to £1.14bn during the last quarter of 2023 compared to the same period one year ago. This is a much higher revenue than the £647mn generated in the UK & Ireland.
Since the Supreme Court lifted the federal ban on sports betting in 2018, gambling companies have spent large sums of money on marketing to capitalize on the online gambling boom in the US.
FanDuel, Flutter’s US-based sports betting business, has a 43 percent gross revenue share in the US market. It is a direct competitor to fantasy sports giant DraftKings and the online gambling giant DraftKings.
As governments look to combat problem gambling, Flutter and other competitors, such as 888 have been subjected to stricter regulation in the UK.
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