City shock as Shell threatens to quit London stock market for U.S.

Shell has threatened to quit the London stock market in what would be a hammer blow to the City.

Chief executive Wael Sawan said the oil giant was looking at ‘all options’ – including the possibility of moving its share listing to New York.

That would be a crushing setback for the London Stock Exchange and the wider British economy following a string of disappointments in recent years including the listing of Cambridge-based chip designer Arm in the US rather than UK.

Shell is the biggest company in the FTSE 100 index with a value of £180billion and is a lucrative dividend payer to UK investors and pension funds.

But amid a growing focus on environmental, social and governance (ESG) issues, investors in Europe have turned against fossil fuels, while the Footsie has lagged behind the S&P 500 in New York in 13 of the past 15 years.

Shock move: Shell chief exec Wael Sawan (pictured) said the oil giant was looking at ‘all options’ – including the possibility of moving its share listing to New York

‘I have a location that clearly seems to be undervalued,’ Sawan told Bloomberg.

It is feared Shell’s departure could see rival exploration giants – including miner Glencore and oil and gas group BP– follow suit. 

The loss of three such stalwarts – all among the top biggest companies in the FTSE 100 by value – would send shockwaves through the City and Westminster.

Sawan said Shell remains focused on a two-and-a-half year ‘sprint’ to cut costs and increase returns to investors in a bid to boost its share price and value by the end of 2025. 

He said the ‘gap’ between the valuation on Shell shares and those of New York-listed rivals such as Exxon Mobil and Chevron represented ‘a fantastic investment opportunity’.

Referring to the company’s strategy to buy back shares to help boost the price, he told Bloomberg: ‘You can worry about the gap or you could buy the gap. 

‘I will keep buying back those shares and buying back those shares at a discount.’

But he added: ‘If we work through the sprint, and we are doing what we are doing, and we still don’t see that the gap is closing, we have to look at all options. All options.’

The threat comes as London struggles to attract new companies to the stock market at a time when others are leaving.

Peel Hunt last week warned that the ‘relentless’ pace of takeover activity represented a ‘feeding frenzy’ that could see more than 100 firms leave the London stock market in the coming years.

Companies have been left undervalued as investors look for better returns elsewhere. 

Some £5.1billion has been pulled from UK-dedicated stock funds so far this year, according to Goldman Sachs.

Hendrik du Toit, chief executive of fund manager Ninety One, said UK assets are ‘unfashionable’.

But he added that they are also ‘dirt cheap’ and are therefore a good investment. Shell’s shares gained 1.2 per cent, or 34p, to 2814p yesterday.