Recent data indicate that foreign companies are flocking to the US market, with the combined value of firms planning US IPOs estimated at roughly $130 billion. This surge builds on last year’s record of 101 initial public offerings by non-US firms, driven largely by the promise of higher valuations and deeper liquidity compared to their domestic markets. For many European and Asian companies, US stock markets now offer valuations that are approximately 35% higher than those available at home, making a switch an increasingly attractive proposition.
The US Advantage in Valuation and Leverage
Investors in the US are known for their greater appetite for leverage, a factor that significantly enhances the appeal of US exchanges. Firms are attracted by the robust capital pools and higher trading volumes, which can help boost share valuations and facilitate more flexible financing. Market participants, such as Clay Hale from Wells Fargo, underscore that US investors are much more receptive to leveraging businesses, a key consideration for private equity-owned companies.
High-Profile Departures and Shifts
Several notable companies have already made headlines by relocating their listings. Swedish buy-now, pay-later provider Klarna, equipment rental firm Ashtead Group, and even British chip designer Arm Holdings have opted to list in the US, underscoring the trend. Glencore, facing declining profits and pressure to secure an optimal valuation, has also publicly considered a move to New York, potentially adding another $50 billion in market value to the exodus from London.
Broader Global Dynamics and Regulatory Factors
This listing migration is not confined to Europe; Chinese companies continue to show interest in the US market despite some high-profile setbacks, such as the delayed IPO of ride-hailing firm Didi Global. With the new US investment restrictions on certain Chinese technologies adding to the complexity, firms like autonomous driving companies Pony AI and WeRide are carefully navigating the regulatory landscape. As global tensions over technology and capital flows persist, the allure of the US market remains strong, even as domestic reforms in Europe and Asia lag behind.
The shift towards US listings reflects a broader reorientation in global capital markets, driven by the promise of superior valuations and a more dynamic trading environment. As companies continue to assess the benefits of deeper liquidity and more favorable financing conditions, the US could see an even greater influx of cross-border listings in the coming years. With policymakers in Europe still working to advance reforms such as changes to listing rules and progress on a Capital Markets Union the trend underscores the competitive pressures that domestic markets face in retaining top-tier international companies.
This record exodus represents a significant challenge to traditional financial centers like London and other Asian exchanges, potentially reshaping the global IPO landscape for years to come.
