IG Group Holdings Plc's (LSE:IGG) review of a potential US stock market listing could unlock a higher valuation if it follows the path taken by several UK-linked companies that have moved their primary listing across the Atlantic, according to Deutsche Bank, which upped its price target ahead of a potential move.
The FTSE 100-listed spread betting and trading platform operator is currently conducting a strategic review, due to conclude by the autumn, which includes consideration of a US listing for its shares.
Deutsche analyst David McCann said recent examples suggest such a move can create significant value for shareholders, looking at the performance of companies including Ferguson, ARM Holdings, CRH and Indivior after they switched their primary listings to the US.
"We found that most of them have had favourable outcomes," McCann said, with all four companies generating strong total shareholder returns following their US listings and generally outperforming the S&P 500, the FTSE All-Share and their respective sectors.
The companies also experienced substantial valuation uplifts, with price-to-earnings multiples expanding both in absolute terms and relative to US and UK market benchmarks.
The analysis comes as London continues to grapple with a steady flow of companies considering overseas listings in pursuit of deeper pools of capital, greater liquidity and higher valuations.
While IG has yet to decide whether to proceed, Deutsche Bank believes the experience of other UK-linked groups suggests investors would be likely to view a US move positively.
The broker reiterated its 'buy' recommendation on the shares and increased its target price to 2,000p from 1,750p. IG shares were trading at 1,913p on Friday.
