European and Asian companies are increasingly considering listing on US stock exchanges, drawn by the potential for higher valuations and access to deeper liquidity pools. This trend signals a potential shift away from their home markets.
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Several prominent companies, including Swedish fintech giant Klarna Group Plc, UK-based equipment rental firm Ashtead Group Plc, and Chinese beverage company Sexy Tea, are reportedly preparing for US listings. These companies represent a combined estimated value of approximately $130 billion, based on various sources including Bloomberg News reports, PitchBook data, and company disclosures. This influx of foreign listings would build upon last year’s record-breaking number of cross-border IPOs in the US.
A significant driver of this trend is the valuation gap between US and international markets. Data compiled by Bloomberg reveals that European and Asian stocks currently trade at a discount of roughly 35% compared to their US counterparts. This disparity makes a US listing an attractive proposition for companies seeking to maximize their market capitalization. Glencore Plc, a major commodities trading and mining company, recently hinted at a potential US listing, which could add another $50 billion to the total market value of companies transitioning to the American market.
“The US currently offers the deepest and most liquid market,” explains Seth Rubin, Head of Global Equity Capital Markets at Stifel Financial Corp. This sentiment is echoed across various sectors and industries, highlighting the broad appeal of the US market.
Record Cross-Border Listings in the US
The US experienced a surge in foreign IPOs in the previous year. According to research by EY, 101 foreign firms went public in the US, representing a 51% increase compared to 2023. These cross-border deals constituted more than half of the total IPOs in the US, marking a historical high. While the proceeds from these foreign listings accounted for about a fifth of the total capital raised, this figure excludes transactions where capital wasn’t the primary objective, such as Flutter Entertainment Plc’s shift of its primary listing from London to New York.
The Allure of the American Market
Anticipation of a growth rally fueled by pro-business policies is further incentivizing European and Asian companies to consider US listings, according to JPMorgan Chase & Co.’s Co-Head of Global Banking, Filippo Gori. Europe, in particular, faces a potential exodus of capital. Ashtead Group, a FTSE 100 component, has already announced its intention to move its primary listing to the US, following in the footsteps of building materials company CRH Plc, which relocated in 2023.
Europe’s Loss, America’s Gain?
Europe has witnessed a significant loss of high-profile IPOs in recent years. Notable examples include British chip designer Arm Holdings Plc’s decision to list in the US in 2023. Furthermore, Carlyle Group Inc. has confidentially filed for a US IPO of Dutch chemicals producer Nouryon, as reported by Bloomberg News. This continued trend underscores the ongoing appeal of the US market for international companies seeking optimal listing conditions. The increasing flow of foreign companies to US exchanges signals a potential shift in the global financial landscape, with the US solidifying its position as a premier destination for companies seeking access to capital and higher valuations.
