Ashtead Group, the £27bn construction rental company, plans to shift its primary listing to New York in the latest blow to the London stock market.
The company, which has been listed on the London Stock Exchange (LSE) since 1986, said the US was a natural home for the company, given that nearly all of profits – about 98% – are made across the Atlantic.
However, its switch away from the UK represents another snub to the LSE, which a number of high-profile businesses have left.
The rental business was founded in Ashtead, Surrey, in 1947 and hires out everything from portable heaters to forklift skips. However, bosses embarked on a series of US acquisitions from the early 2000s that enlarged its American operations, and eventually led to the bulk of its employees and executives being based in North America. While Ashtead’s formal headquarters are in London, bosses said most of its operations were run out of offices in South Carolina.
“The board has been evaluating the optimal listing location for the group,” Ashtead told investors. “The board has concluded that the US market is the natural long-term listing venue for the group, and that moving to a US primary listing (while retaining a UK listing in the international companies segment) is in the best interests of the business and its stakeholders.
“Today Ashtead is substantially a US business, reporting in US dollars, with almost all the group’s operating profit … derived from North America, which is also the core growth market for the business.”
Companies such as the Paddy Power owner, Flutter, and the travel company Tui announced plans to switch their primary listings from London to rival hubs such as New York and Frankfurt this year.
Meanwhile, London has lost out on blockbuster IPOs including that of the UK chip designer Arm, which opted to list on Wall Street in August 2023. The buy now, pay later company Klarna has followed suit.
Ashtead shares dropped sharply on Tuesday to value it at £27.4bn, making it the 25th largest company on the FTSE 100, behind companies such as NatWest Group, which is worth £33bn. Ashtead’s shares fell 11% on Thursday morning, making it the top faller on the FTSE 100.
The company – which operates under the Sunbelt Rentals brand – said the move would ensure it had more exposure to American investors in a market where it would be easier to raise money for the business.
Ashtead added that it would also help it to recruit and retain “top US talent”. That comment is likely to add to controversial calls from some to increase executive pay in the UK, amid claims that companies and executives will continue defecting overseas where remuneration is much higher.
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In 2022 average pay for UK executives was a fifth of what their US counterparts were getting. Bosses at the London Stock Exchange argue that this differential is particularly worrying for big international companies that compete for business in foreign markets, but end up being paid “significantly below global benchmarks”.
Ashtead said it would discuss its plans with shareholders before putting forward a formal vote “in due course”.
“The board expects that the necessary steps would be implemented over the next 12-18 months,” Ashtead said.
