(BFM Bourse) – The oil major has indicated that it is considering coming to New York for its main listing. But to get on the emblematic Wall Street index, the group must be domiciled in the United States, which is not part of its plans.
Totalenergies’ announcement had the effect of a small bomb on the Parisian market on Friday. The oil major’s CEO, Patrick Pouyanné, told Bloomberg and then to analysts that the group’s board of directors had asked him to study a primary listing on the New York Stock Exchange.
The group is currently absent from the American market, with only an “ADR” (American deposit receipt), a certificate of deposit which allows American investors to position themselves on foreign groups and which does not constitute a “real quotation”, as Patrick Pouyanné told analysts on Friday.
The idea is to get closer to the group’s shareholder base, while American investors hold nearly 50% of the major’s capital. Above all, American shareholders are gaining ground in the group’s capital while Europeans are tending to exit. “We are faced with a situation where European shareholders are selling or maintaining their stake, and where American shareholders are buying,” Patrick Pouyanné explained to Bloomberg.
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A question of domiciliation
However, could Totalenergies claim entry into the major benchmark index in the United States, namely the S&P 500? The question is far from trivial at the moment when passive management, which consists precisely of investing in funds replicating major indices (ETFs), is gaining momentum. According to Morningstar, cited by the Financial Times, assets under passive management in the United States amounted to 13,300 billion dollars last year compared to 13,200 billion for active management.
Patrick Pouyanné himself answered this question Friday afternoon, asked by an analyst from Goldman Sachs. “You know the answer to the question and you know very well that you cannot join the S&P 500 if you are not domiciled in the United States, which we do not want to do,” he said. “The index (S&P 500, Editor’s note) would be a plus but it is not on the program,” he concluded.
The rules set by S&P Global stipulate that a company must be “domiciled in the United States” to integrate its reference indices. However, Totalenergies has stated on several occasions that it wants to keep its head office in France.
“I care about Total, I care about the French headquarters of Total, Total is a French company and must remain a French company,” declared the Minister of the Economy, Bruno Le Maire, on Sunday evening. However, the political leader recognized that the oil group’s observation was “lucid”. “There is no money in Europe,” snapped the leader. “If we want Total’s stock market headquarters to remain in Europe, we must offer it the means to develop,” added Bruno Le Maire.
See you in September?
For the record, inclusion in the S&P 500 involves other obligations, which Totalenergies would easily fulfill. Among them, a market capitalization greater than 18 billion dollars (the group exceeds 170 billion dollars), and a positive net profit over the last quarter as well as over the last four quarters, in American accounting data (US GAAP) .
This subject of domiciliation can also explain why Stellantis, which is listed in New York, Milan, and Paris, is not present in the S&P 500. The company resulting from the merger between PSA and Fiat Chrysler is domiciled in the Netherlands.
However, Royal Bank of Canada mentioned in September the case of the British Ferguson, a company specializing in the distribution of heating articles and sanitary products, and which has chosen to transfer its main listing to New York. This company has not moved its head office but it has an “operational headquarters” in the United States and therefore considers itself eligible for inclusion in the S&P 500, reported the Canadian bank. However, this has not yet happened.
To return to Totalenergies, Patrick Pouyanné stressed that, even if his group did not enter the S&P 500, “when I discuss with American shareholders”, having direct access to the action in the United States “would be a plus ‘rather than via ADR or action in Paris (with the exchange rate as a risk, Editor’s note)”.
The manager specified that he would submit his thoughts to the board of directors on the potential main listing in New York by next September.
Let us also remember that nothing says at the moment that the group will not opt for a dual listing, both in Paris and in New York.
“Totalenergies’ thinking “underlines the structural disadvantage that large European companies face compared to their American counterparts. We are not convinced that the group will actually take the step (of a main listing in New York, Editor’s note), but it is at least a useful reminder of the relative valuation differences in a global context,” commented Friday Royal Bank of Canada.
Julien Marion – ©2024 BFM Bourse
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