The possibility of higher valuations and access to greater capital has prompted the shift away from London, but few companies have found success in the US market.

According to BNP Paribas SA, only three out of the 22 UK companies that have listed in the US market over the past decade are still trading higher. Similarly, data compiled by Bloomberg arrive at similar figures. Tom Snowball, Head of equity capital markets for the UK at BNP Paribas, warns that "life as a foreign private issuer in the US is not a straightforward one." Despite the potential benefits of listing in the US, companies must navigate complex regulatory requirements, higher fees, and increased scrutiny from investors.

Moving to New York – not for all

When it comes to primary listings, the US Tech 100 Index, also known as the Nasdaq-100, has been an attractive option for UK companies seeking to access deeper capital markets and potentially higher valuations. However, as Andreas Bernstorff of BNP Paribas points out, a listing in the US may not be suitable for all companies. In fact, he estimates that only a small percentage of UK IPO candidates, around 5-10% realistically have a choice between New York and London.

Listing on the Nasdaq-100 should be considered on a case-by-case basis, as Bernstorff emphasises. It typically makes the most sense for companies that have strong revenues in the US or other solid links to the region. For companies without such a track record, the journey across the Atlantic via blank-check listings has proven to be difficult, with some faltering along the way.

Given the risks and challenges of listing in the US, it's important for UK companies to carefully evaluate their options before making a decision. While the potential rewards can be great, companies must also weigh the costs and complexities involved in listing on the Nasdaq-100. For some, a local listing in London may be the more sensible and viable option. The decision should be based on the company's unique circumstances and goals.

Efforts to boost listing activity

Faced with the threat of an exodus, the UK government has stepped up efforts to boost listing activity by tweaking rules to put the City on an equal footing with its American counterpart. These changes are yet to bear fruit. Only three tiny firms have listed in London so far this year, raising only about $14 million combined, the lowest since at least 2009.

It remains to be seen if new firms will join the British market, but even holding onto its existing listings would increasingly look like a win for London. Despite the challenges, the UK's capital markets remain an attractive option for many companies, especially those with strong ties to the UK or Europe.

The Softbank-owned Arm Ltd, a British tech star, is among recent companies to have picked New York for their main listings ahead of the city. Arm's business model is based on licensing its technology to other companies, which then use it to develop their own products. Arm's technology is widely used in mobile devices, embedded systems, and other products that require low-power, high-performance computing.

In 2016, Arm was acquired by SoftBank Group Corp., a Japanese conglomerate, in a deal worth $32 billion. The acquisition was seen as a major move by SoftBank to position itself as a key player in the emerging Internet of Things (IoT) market.

Arm's technology is used by many of the world's leading technology companies, including Apple, Samsung, and Qualcomm. The company has offices and operations around the world, including in the UK, the US, China, and India. In addition to its licensing business, Arm has also developed its own products, including processors, software, and development tools. The company is widely regarded as a leader in the semiconductor industry and has won numerous awards and accolades for its technology and innovation.

Even some members of the benchmark FTSE 100 index are considering transferring their primary listings to Wall Street.

Dublin-based CRH Plc, one of Europe's biggest building materials companies, said last month it plans to move its primary listing to New York from the UK. Meanwhile, Oxford Nanopore Technologies Plc, the British biotechnology company, that specialises in the development and manufacture of DNA sequencing, has said it would consider a foreign quotation.

Oxford Nanopore's technology was listed in London about 18 months ago. The company uses nanopores, which are tiny holes in a membrane that can be used to detect and analyse individual molecules, including DNA and RNA. Its flagship product is the MinION, a portable DNA sequencer that can be used in the field, in real-time, for a wide range of applications, from disease surveillance to environmental monitoring.

Summary

Many UK companies are considering transferring their primary listings to Wall Street in search of deeper capital markets and potentially higher valuations. Data shows that only three out of the 22 UK companies that have listed in the US market over the past decade are still trading higher.

Companies must navigate complex regulatory requirements, higher fees, and increased scrutiny from investors in the US market. Listing on the Nasdaq-100 should be considered on a case-by-case basis and typically makes the most sense for companies that have strong revenues in the US or other solid links to the region. The UK government has stepped up efforts to boost listing activity by tweaking rules to put the City on an equal footing with its American counterpart, but these changes are yet to bear fruit.

Some members of the benchmark FTSE 100 index are considering transferring their primary listings to Wall Street, but even holding onto its existing listings would increasingly look like a win for London.

The UK's capital markets remain an attractive option for many companies, especially those with strong ties to the UK or Europe. Ultimately, the decision to list on the Nasdaq-100 should be based on the company's unique circumstances and goals.