British American Tobacco PLC (LSE:BATS) is facing pressure to move its main stock market listing to New York after a top-five shareholder said it “makes no sense” for the cigarette maker to remain on the UK stock market.
Rajiv Jain, founder of US$92bn US-based investment firm GQG Partners, told the Financial Times he had urged the management of the FTSE 100-listed owner of Lucky Strike and Dunhill to call time on a London listing that dates back to 1912.
Jain said: “The core ownership base [of BAT] has disappeared. It makes no sense for them to remain there.”
He highlighted the US-centric nature of the company’s business and the valuation gap between BAT and its US-listed peer Philip Morris International, where GQG is a top-10 shareholder, asking: “What’s the point of remaining listed in London?”
The lure of higher valuations and a deeper pool of investors in the US have sparked a string of departures from London with CRH, the world’s biggest building materials company, the latest business to seek an exit from London.
The US accounted for about 40% of BAT’s £27.6bn global revenues last year on a constant currency basis, making it the cigarette maker’s biggest market.
Its US subsidiary Reynolds owns the popular Newport and Camel cigarette brands, while BAT’s Vuse vape has a 41% market share in the e-cigarette category, according to Nielsen data.
But despite generating slightly higher revenues and operating profits than Marlboro maker Phillip Morris International, BAT’s valuation lags far behind its New York-listed rival.
At its current share price on Thursday BAT has a market value of £67.45bn less than half its US peer (£149.1bn.)