The offices of London Stock Exchange Group Plc, right, in Paternoster Square in the City of London, UK.
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LONDON — TUI has become the latest company to abandon its London IPO as shareholders voted overwhelmingly for the German travel giant to list exclusively in Frankfurt.
Investors in the Hanover-based group voted 98.35% in favor of moving the portion of its shares traded on London Stock ExchangeFTSE 250 on the Frankfurt MDAX, with the transfer expected on June 24.
TUI has a dual listing between the two cities, but said in a statement on Tuesday that the company had been approached by various investors last year questioning whether this was still optimal given changes to the company’s share ownership structure and a “significant change in liquidity from the UK to Germany’.
Around 77% of TUI share trades are currently settled through Germany, with the UK now accounting for less than a quarter.
“A lot of the liquidity, the volumes, already for quite some time went from the UK trading line to the Frankfurt trading line, so on the back of that we were really approached last summer by shareholders,” TUI Chief Financial said. Officer Mathias Kiep told CNBC on Wednesday.
“A lot of the comments were about if we went to Frankfurt, one, the liquidity would only be in one pool. The other point was that a lot of people said ‘then you’re more prominent in the MDAX than where you are today in the FTSE 250’, and there were also some comments that [the U.K.] it could be a more demanding market environment today.”
UK shares are trading at a significant discount to the rest of Europe, having suffered an investor flight in recent years. The country’s blue chip FTSE 100 Index down by almost 5% over the past year, compared to a 5% increase for pan-European Stoxx 600.
London is still a contender
London has also suffered a number of write-offs and high-profile banning levies over the past year. The number of applications to be registered per square mile fell to a six-year low in 2023according to data obtained by investment platform XTB at the end of last year and reported in several British media.
British semiconductor and software design firm Arm, owned by Japanese investor SoftBank, largely opted last year to list in New York Nasdaqalong with a number of other technology companies, despite efforts by Prime Minister Rishi Sunak’s government to persuade the company to list in London.
“It’s very disappointing to see another company leave the LSE’s main market, following multiple acquisitions and delistings last year, and with companies such as Arm turning to the NASDAQ for an IPO,” Melanie Wadsworth, partner at international law firm Faegre Drinker. , he told CNBC on Tuesday.
“However, I can understand the reasoning behind this proposal, given that TUI is headquartered in Germany and only around 22% of its business in 2023 was through the UK market. Therefore, I hope that this decision is driven by factors specific to TUI rather than indicative of a trend’.
Tom Bacon, partner at global law firm BCLP, said it was understandable for some to point to TUI’s delisting as another example of companies moving away from London, but agreed it was important to consider the specifics of TUI’s case.
“Like other recent examples, there are specific reasons for this decision relating to the merger of TUI Travel plc and TUI AG in 2014,” Bacon said by email on Tuesday.
“By various measures, London remains the largest stock exchange in Europe and actually performed better in 2023 in terms of activity than other European exchanges such as Frankfurt, Paris and Amsterdam.”