Dual-location listings are becoming popular as shipping stocks compete for capital. Over the past year, more and more shipowners have opted for simultaneous listings in New York and Oslo. The most notable examples are BW LPG and Hafnia, which have long been listed in Norway, and have recently decided to enter the US capital markets.
Many global equity funds are unable to invest in Oslo due to authorisation restrictions, making New York a more viable option.
As the world's largest and most diverse capital market, the US can give shipowners access to a much wider range of investors than Oslo. The pool of cash available to shipowners comes not only from the US, but from all over the world.
At the same time, companies listed in New York may also be included in various US index funds, such as those managed by Vanguard, a possibility that means listed stocks will indirectly become part of the pension portfolios of millions of Americans.
During financial or geopolitical crises, some investors also move money from markets such as Norway to the US.
It is clear that the New York and Oslo stock exchanges are competing to become the capital of shipping stocks, and shipowners will choose the optimal solution between the two, or even both.
Since the 2008 financial crisis, the Norwegian krone has depreciated sharply against the US dollar, falling from 5 kroner per dollar to 11 kroner per dollar. Over the past 10 years, dollar returns on the Oslo Stock Exchange have been consistently close to zero. Listing in New York mitigates this exchange rate risk for investors.
However, listing in the US also means that shipowners are a small fish in a big ocean. By listing in Oslo, shipowners can become a relatively large fish in a popular and familiar pond.
For example, the largest company listed and traded on the Oslo Stock Exchange is Statoil (Equinor), valued at NOK 870bn ($81.4bn), while the US market capitalisation of Microsoft, at $3.3 trillion, is roughly 40 times larger.
In Norway, SMEs can gain more visibility.
Shipping is deeply embedded in Norwegian culture, with a strong network of shipowners, banks, brokers, investors, lawyers and insurance companies supporting the Norwegian shipping community in a complete shipping ecosystem. Walk from BW's office in Skoyen along the Oslo fjord to DNB's headquarters and you'll come across a cluster of shipping elements, including Clarkson, BNP Paribas, John Fredriksen's company and Fearnleys.
Norwegian investors, whether in funds or family rooms, often have a background in shipping, sometimes stemming from old family fortunes.
Norwegian and Scandinavian retail investors have also made significant contributions to the liquidity of smaller, more volatile stocks.
By contrast, shipping is a niche industry on Wall Street, with only a handful of analysts specialising in equity research, such as Jefferies' Omar Nokta.
The option of dual-listing usually means higher costs due to the increased complexity of reporting and compliance. Only large and powerful shipping groups, such as those owned by BW Group or Fredriksen, usually have the resources to manage a dual listing. These groups often have extensive capital market knowledge, a large investor network and the necessary resources.
For those shipowners who can afford the costs and are well versed in capital management, a dual listing offers the scale and depth of the US market, as well as the expertise and tradition of the Norwegian market, so it can be said that "the fish and the bear's paw can be achieved to some extent".
As Kristian Sorensen, CEO of BW LPG, points out, "This is not replacing Oslo. It's a complementary item."
Of course, not all shipowners are suited to listing in both New York and Oslo. Ultimately, the stock exchange does not determine stock returns and market capitalisation performance; what matters is how a company performs through the business cycle and how well it is managed by its senior management.
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