London loses another listing, but analysts wary of writing off UK

LONDON — TUI became the latest company to ditch its share listing in London, as shareholders voted overwhelmingly for the German travel giant to list solely in Frankfurt.

The Hannover-headquartered group’s investors voted 98.35% in favor of moving the portion of its shares traded on the London Stock Exchange‘s FTSE 250 to Frankfurt’s MDAX, with the transfer expected to occur on June 24.

TUI has a dual listing between the two cities, but said in a statement Tuesday that the company was approached by various investors last year questioning whether this was still optimal, given changes in the ownership structure of the company’s shares and a “marked shift in liquidity from the U.K. to Germany.”

Around 77% of transactions in TUI shares are currently settled via Germany, with the U.K. now accounting for less than a quarter.

“A lot of the liquidity, the volumes, already for quite some time went from the trading line in the U.K. to the trading line in Frankfurt, so on the back of this, we were actually approached last summer by shareholders,” TUI Chief Financial Officer Mathias Kiep told CNBC on Wednesday.

“A lot of comments were about if we were to go to Frankfurt, one, liquidity would be in one pool only. The other point was that a lot said ‘then you are more prominent in the MDAX than where you are today in the FTSE 250,’ and there were also some comments that [the U.K.] could be a more challenging market environment today.”

U.K. stocks are trading at a considerable discount to the rest of Europe, having suffered an investor flight in recent years. The country’s blue chip FTSE 100 index is down almost 5% over the past year, compared to a 5% increase for the pan-European Stoxx 600.

London still a contender

London has also suffered a number of de-listings and high-profile IPO snubs over the past year. The number of applications to list in the Square Mile fell to a six-year low in 2023, according to data obtained by investment platform XTB late last year and reported in several U.K. media outlets.

British semiconductor and software design firm Arm, owned by Japanese investor SoftBank, notably opted last year to list on New York’s Nasdaq, along with a number of other tech companies, despite efforts from Prime Minister Rishi Sunak’s government to persuade the company to list in London.

“It is very disappointing to see another company leave the Main Market of the LSE, following multiple takeovers and de-listings last year, and with companies such as Arm turning to NASDAQ for IPO,” Melanie Wadsworth, partner at international law firm Faegre Drinker, told CNBC on Tuesday.

“However, I can understand the rationale behind this proposal, given that TUI’s headquarters is in Germany and only approximately 22% of its trading in 2023 took place via the U.K. market. I would therefore hope this decision is driven by factors specific to TUI, rather than being indicative of a trend.”

Tom Bacon, partner at global law firm BCLP, said it was understandable for some to point to the TUI de-listing as another example of companies moving away from London, but agreed that it was important to consider the specifics of TUI’s case.

“Much like other recent examples, there are specific reasons for this decision related to the legacy merger of TUI Travel plc and TUI AG in 2014,” Bacon said via email Tuesday.

“On various metrics, London remains the largest exchange in Europe and has actually faired better in 2023 in terms of activity than the other European exchanges like Frankfurt, Paris and Amsterdam.”