Former Shell head says oil giant is “massively underestimated” in London, and could benefit from moving its listing to US. This is another blow for the UK stock exchange.
Ben van Beurden who was responsible for Shell’s shift from The Hague, Netherlands to London, UK by 2022, and the removal its dual-class shares structure, revealed that the board of the company had decided previously that moving to the US would be “a bridge too much”.
He said on Tuesday, however, that US listed oil companies benefitted from a larger pool of capital and higher valuations as well as “more positive” investor attitudes.
All these factors conspire to harm the listed companies in Europe. This is a growing problem, and I believe it will become more prevalent. . . In his first interview with the public since leaving Shell, he stated that “Something will have to go”. The company is undervalued massively. . . The share price is at a record high today, but could be much higher.”
Van Beurden’s comments will increase fears that London’s most valuable listed company may eventually leave the UK Stock Exchange. The news comes after it was revealed that last year, the oil giant had considered moving its headquarters to the US before deciding to keep their London base and listing.
Recently, the UK equity market suffered a number of high-profile losses as companies such as building materials group CRH or packaging company Smurfit Kappa moved to New York.
Wael Sawan expressed his concerns regarding the London Stock Market in a interview that was published on Monday by Bloomberg. He said, “I have an area that seems to be undervalued.” Sawan said he would close the gap through cost-cutting, but if this did not work he added that “we will have to consider all options.” “All options.”
Van Beurden stated that the valuation difference between European and US listed companies has “existed for many years, and will take time to resolve, perhaps forever”.
He also defended the decision of his successor to downgrade this year some of the energy transition targets for the company, saying that the world has changed since he first set these goals nearly a decade earlier and Sawan had the right to be honest with the company about its progress.
He said, “If you find things that don’t work you need to change your strategy and your goals.”
“[Sawan] I believe it is an honest approach, and he has absolutely no doubt. It would be wrong to just blather on and pretend that all of this is happening when it’s not. “I completely understand what he has done, and I’d support it 100%.”
He said that when Shell announced its climate targets for 2016 “we were correct at the time but many things have changed”.
Van Beurden, who said in 2016 that he thought the chances of a smooth transition to net zero were “pretty high”, now believes it is “very unlikely”. He added that the journey will “definitely be bumpy” and that there is a chance that the energy transition could “completely derail”.
He said, “I believe the entire sentiment has changed. We have to recalibrate.”
Van Beurden described his three-year tenure at Shell as “very difficult to work through”. The company’s decision to leave Russia triggered a $4.2bn writedown “the weekend following the invasion.”
Van Beurden stated that Bernard Looney, the then Chief Executive of BP, called van Beurden on Sunday night and informed him that BP would be leaving. In principle, on Sunday night we decided to leave too. On Monday morning, we formally notified the board.
He added, “We have taken all measures and spoken to the governments. We announced the close of the business on Monday.”