BHP’s move raises question marks over the attractiveness of London
BHP, the mining giant, has dealt a blow to the FTSE 100 by revealing plans to move its primary listing to Sydney.
The company said that it will lose its dual corporate structure and separate listings in Sydney and London. As a result, and pending approval from shareholders, BHP will separate from the FTSE 100.
This means that index funds will be required to sell their positions in the company which mines resources including iron ore, copper, nickel and metallurgical coal.
“Now is the right time to unify BHP’s corporate structure,” said chairman Ken MacKenzie. “BHP will be simpler and more efficient, with greater flexibility to shape our portfolio for the future.”
“Our plans announced today will better enable BHP to pursue opportunities in new and existing markets and create value and returns over generations.”
Fund managers, who have long benefited from BHP’s substantial dividend and the increase in the value of its share price, have been left frustrated by the news.
In addition, it has raised a question mark over the attractiveness of London as a destination for listing companies.
“Today’s announcement is very significant — with the likely outcome that BHP leaves UK indices,” Nick Stansbury, head of climate solutions at Legal & General Investment Management, a top-ten shareholder, told The Times. “If this is indeed the case for UK index investors, it is our view that losing a company of the calibre of BHP is disappointing.”
“However, BHP’s proposal is supported by a robust and clearly articulated value case with the potential for investors in the UK company to benefit from the possible narrowing of discount to the Australian company.”
“It is important that UK index investors are able to realise that benefit and we will continue to review the proposal with this in mind.”
Over the past five years the BHP share price has added 115.48%.
