Secondary listings in the US? Oh yes.

It’s a truth universally acknowledged that for secondary listings, US IPOs have generally fared better than their EU counterparts. The reason is not entirely binary; ie: just because of US TAM and/or state-side valuation perception, but actually due to a variety of investor-specific reasons.

First off, the TAM subject. By 2030, it is estimated that the state-side gambling market will be worth in excess of US$35bn. Just looking at Flutter alone, it is on track acquire 40% share of this addressable market, which on current trajectory would result in an EBITDA of £2.2bln in 2030. Even if this target is reached, there nonetheless will be more than $21bn of addressable revenue up for grabs by competing brands, all of which require lucrative marketing spend and US talent recruitment, and no better avenue – especially in such high interest-rate markets – than retail investors to resort to.

Secondly, market cap perceptions. Most US-floated equities enjoy a high price/earnings and book-value ratio than their European cousins. There of course are side-effects (the shorts market is also larger and more volatile) but in the long term a stateside listing enjoys a larger market capitalisation; partly due to TAM, partly due to liquidity, mostly due to the madness of crowds.

And then there’s the issue of the great abandonment. What’s becoming increasingly more likely, especially with the likes of Flutter, is that many US secondary listers may eventually abandon their London float (and with it the less than ecstatic performance) in favour of the NYSE. This will not the first time that someone from the FTSE100 (and especially the FTSE250) has ditched London as its primary listing. And the last three years have especially not been pretty for UK-based IPOs, not entirely coincidentally since Brexit has happened. Also, double the market exposure means double the scrutiny and risk, so it’s likely that once a secondary float stabilises and becomes widely traded, it may very well supersede and eventually replace its primary listing.

So, in a nutshell – yes there will be secondaries. Expect more UK and EU listed companies to follow suit in the coming year with an added side-effect that they may leave their incumbent market entirely. Question is… who will be next?