Flutter’s decision to float in the US comes despite a proposal to ban betting adverts across the Atlantic, with the Paddy Power owner reassuring the float would still be a beneficial decision.
Aside from giving it access to deeper capital markets, new US investors and providing it with greater liquidity, Flutter Entertainment PLC (LSE:FLTR) may be bearing in mind the UK’s own moves to increase regulation on betting companies.
Analysts largely agreed Flutter’s US float would “make sense,” with both Jeffries and Davy Research highlighting the move’s potential to enhance its liquidity and expose it to more American investors.
Jefferies even noted the proposed ban could lead to higher profitability for Flutter, given its roughly US$1bn advertising spend in 2022, while allowing established brands to win greater market share.
Dual listings have become a key feature of the increasingly globalised financial market, allowing companies “with an appetite for rapid growth” to access investors across the globe, explained law firm Watson Farley & Williams.
Since Flutter is already listed in the UK, a secondary float would do just that, exposing it to around 27% of the world’s consumer market, as per New York Stock Exchange data.
On top of this, 34% of globally listed companies’ liquidity is trading in the US, on the NYSE and the Nasdaq indexes, with both boasting larger shares than foreign other foreign exchanges.
Listing in the States also allows companies to carry out acquisitions and other transaction in the US Dollar - an often inviting prospect given its status as a safe haven during times of economic slowdown.
As of early 2021, some 28% of companies listed in the UK were incorporated outside of the country, Watson Farley & Williams added, although the London markets struggled to attract new listings last year amid higher inflation and recessionary figures.
Just 45 companies floated on the London Stock Exchange and its junior AIM last year, down 62% from 119 in 2021, according to professional service firm EY.
Across the Atlantic, 149 initial public offerings took place in 2022, worth US$20.8bn, although this fell too from 908 a year a year earlier, say analysts at S&P Global.