Shell is considering a move to New York, as the divide widens between traditional investors, who want the company to focus on oil and gas, and activist investors, who want more renewables.
Oil and gas giant Shell has become the latest blue-chip stock to announce it is thinking about leaving London and moving to list in New York. The reason is mainly due to the company feeling under-appreciated by investors and other stakeholders in London.
Increased criticism from climate activists, who have very vocally protested against Shell’s continued oil and gas projects and investments, has also contributed to this. Similarly, investors have also been more unhappy lately about the company not focusing enough on renewable energy and transitioning its existing fossil fuel systems to greener options.
Anti-business policies in the UK seem to have made things more hostile for a number of mining and oil and gas companies. One concern is the possibility of a separate windfall tax which is expected to be stricter than the current energy profits tax.
More employee rights laws are also expected to come into action in the near future, leaving several companies feeling skittish and uncertain. Corporation Tax, however, seems to be a lesser concern as it is unlikely to be raised more than the present 25% rate.
If Shell does end up moving to New York, it could deal a significant blow to London’s stock market. Currently, Shell is the biggest company listed in Britain by market value, which is approximately £168 billion (€196 billion), followed by AstraZeneca at £164 billion (€191 billion). The FTSE 100 index is also propped up mostly by commodity, mining and oil companies.
What Shell’s departure could mean for other UK energy firms
Shell leaving for New York might prompt other mining and energy companies such as Glencore to up sticks and move to a more welcoming market. Glencore’s coal business has already snubbed London, opting for a New York listing, with Johannesburg and Toronto receiving secondary listings.
Now, more concerns have emerged that the rest of Glencore’s business may follow Shell as well, along with other oil giants such as BP.
Ashley Kelty, Panmure Gordon’s head of oil and gas research, said, as reported by Yahoo Finance: “”n New York, Shell won’t come under the same amount of pressure around the environment and greenwashing – they will be allowed to get on with what they do.
“If they do go, it would suggest they want to row back on the renewable side even farther than they’ve admitted previously because, in Europe, they will get penalised.
“Americans are far more positive towards oil and gas than Europeans. They don’t see it as being the great evil that is perceived to be here, and the tax regime is more supportive.”
A number of other UK companies such as Smurfit Kappa, CRH, Flutter Entertainment and Arm Holdings have also left the UK in recent months for US listings. This was mainly in order to take advantage of a deeper investor and capital pool as well as more expansion opportunities.
