Pan-European stock exchange Euronext NV said it is trying to help French energy giant TotalEnergies SE capture more US investor money while retaining its main listing in Europe.
TotalEnergies has said it is looking at a potential move of its primary stock listing to New York in order to bridge the valuation gap with US competitors, a move Euronext is trying to prevent.
“I’m confident that we’ll find technical solutions for Total to remain listed where the liquidity is,” Euronext Chief Executive Officer Stephane Boujnah said in an interview on Bloomberg TV on Wednesday. Euronext, which operates stock markets across Paris, Amsterdam, Brussels, Dublin, Lisbon and Oslo, said liquidity for the French company is “massively better” in Europe than in the US.
European exchanges are struggling to hold on to companies that believe they can achieve higher valuations from the deeper pool of investors in the US. The urge to shake off this discount is particularly strong for Big Oil, which is regarded more favourably by Wall Street fund managers who pay less attention to environmental, social and governance metrics than their European peers.
TotalEnergies CEO Patrick Pouyanne has said the findings of a study into a potential switch in primary listing from Paris to New York would be presented to the board in September. He returned to the topic Wednesday during a panel discussion at the Qatar Economic Forum.
“There is no emotion — it’s a question of business,” Pouyanne said in Doha. “What we observe is that we have more and more US shareholders. Today we can only offer them ADR and we want to offer them shares.”
“We have less European shareholders, including French shareholders, probably because of all the debate about ESG, etcetera,” Pouyanne said. “And then you see quite a difference of valuation between the US market and the European market. So it’s a fiduciary duty for the board to study” the proposal, he said.
French President Emmanuel Macron has voiced his disapproval at the possibility, saying he would be “not at all” happy with such a decision by the oil giant.
Boujnah said that European investors are “more tempted” to follow ESG requirements, which reduces their appetite for the sector. “It’s true that the peers of Total enjoy better multiple valuations in the US because the investor base in the US remains more friendly to oil and gas than the European investor base.”
The European Union’s largest bank, BNP Paribas SA, for instance, has said it won’t be participating in conventional bond issuance for the oil and gas sector increasing its restrictions on fossil-fuel clients.
Shell Plc CEO Wael Sawan, on the other hand, has said the oil major continues to trade below “fair market value,” but believes that “simply relisting is not going to address” the fundamental valuation of the company.