Shell considers quitting London for New York in threat to City
SHELL is considering quitting the London Stock Exchange for New York in what would be the biggest blow to the UK’S struggling share market so far.
Wael Sawan, the oil giant’s chief executive, said the company is looking at “all options” for its listing amid concerns it is under-appreciated by investors. In an interview with Bloomberg, he said: “I have a location that clearly seems to be undervalued.”
His comments will spark fears that Shell – Britain’s most valuable listed company, worth around £180bn – could become the latest blue chip business to flee the London market. Its departure would deal a major blow to investors who rely on dividend income from FTSE 100 companies, including tracker funds and pension schemes that support millions of retirees.
The FTSE 100 index has traditionally been dominated by oil and gas, as well as mining and commodity stocks. There are concerns, however, that a growing focus on environmental, social and governance (ESG) measures among institutional investors is threatening that status, with some companies starting to defect to the United States.
Ashley Kelty, head of oil and gas research at Panmure Gordon, said Mr Sawan’s comments reflect a negative perception of oil and gas in Europe, where Shell has faced criticism from climate activists and some of its own shareholders for not investing more in renewable power.
The oil giant is also under pressure to close a valuation gap with US rivals such as Exxon Mobil and Chevron.
Mr Kelty said: “In New York, they [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 further than they’ve admitted because [in Europe] they’ll be 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.”
He added that the comments from Shell’s chief executive should also be seen as a “warning shot” to the Government and Sir Keir Starmer’s Labour Party. It has vowed not to raise corporation tax above the current 25pc but has separately suggested it will introduce a “proper” windfall tax on oil and gas companies that is tougher than the Government’s existing energy profits levy.
Sir Keir has also vowed to introduce a package of “day one” employee rights that have raised business concerns.
A decision by Shell to quit the City would be the latest in a string of blows. Mining giant Glencore last year chose to spin off and list its coal business in New York, while its secondary listings went to Toronto and Johannesburg.
Any decision to shift Shell from London would fuel concerns that Glencore could move its remaining listing to the US – an option already mooted by analysts. And rival energy giant BP, which is the fifth-largest company on the index, could also follow suit.
It comes as Shell looks to shift its business away from oil and gas towards greener sources of energy. But its hybrid approach has risked alienating traditional investors focused on profits, while failing to appease more activist investors over climate change.
Mr Sawan said he was focused on a turnaround plan to slim down the company and boost its value but he acknowledged it may have to take more drastic action if the gulf in valuation between Shell and its New York-listed rivals, Exxon Mobil and Chevron, is not resolved by the end of next year.