Invesco, the Atlanta-based fund management group, has proposed to shareholders a shift of its primary listing from London to New York, running counter to the trend of companies opting for the UK as their base for its lighter touch regulatory environment, the Financial News reports.
The shift will end 19 years as a UK company for Invesco, which listed in London in 1988 after it merged with asset manager Britannia Arrow. It first listed shares as American Depository Receipts on the New York Stock Exchange in 1995.
The firm will continue to work with its corporate brokers, UBS and JP Morgan Cazenove, who will manage the process, said Loren Starr, chief financial officer of Invesco.
The group lost its foreign issuer status in July, after US investors owned 53 percent of Invesco’s shares. That means it is now subject to full requirements of both the US Securities and Exchange Commission and the UK’s Financial Services Authority.
It must also comply with two different accounting standards: the Generally Accepted Accounting Principles in the US and International Financial Reporting Standards in the UK.
“The regulations mean the US is now de facto our primary regulator. It wasn’t an option for us to not choose the US,” Starr says.
Martin Flanagan, president and chief executive officer of Invesco, says, “Having our primary stock listing on the New York Stock Exchange is the most practical way to once again place Invesco under the supervision of a single primary regulator and minimize the possible disruption associated with dual regulatory and accounting standards.”
The group’s two largest shareholders are headquartered in the US. Boston-based Wellington Management has a 12.46 percent stake and Franklin Resources of San Mateo, Calif., holds 7.89 percent, according to regulatory filings.
However, delisting in London will lead it to forego money from UK passive investors that the FTSE indices. L&G Investment Management is the company’s third largest shareholder with a 3.33 percent stake.
“Our situation has been well known and we’ve seen individual shareholders in the UK either not buy, or certainly sell and the US shareholders have been buying,” Starr says. “There may be some shares which get sold when we leave the FTSE, but we think that’s balanced by shareholders in the US who might assume we get into the S&P 500. That’s not a process we control but when we look at the criteria, we feel we meet them.”
Flanagan also said a US listing would improve visibility and provide direct comparability with a more appropriate peer group of large, global investment management companies. Several large fund management companies in the US are listed, including BlackRock, Legg Mason and Franklin Resources.
The company is considering relocating its headquarters from the UK to Bermuda, which will allow it to maintain legal, regulatory capital and financial positions consistent with its current standing.
Had Invesco chosen to base the business in the US, its shareholders would have faced an immediate tax hit, having to pay capital gains tax.
Pending shareholder and regulatory approval, Invesco has set a target date of Dec. 4 to complete its US listing.