How to decide whether to list in your home market or overseas

Capital market, stock exchange and listing segment – what's the right option when taking your business public?

When preparing for an IPO, one of the most important decisions you have to make is to work out which capital market or listing zone, stock exchange and segment will best support your company’s strategy. Selecting the right option will enable you to determine the regulatory requirements that your company will have to meet. If an IPO abroad is a valid option for you, an IPO destination evaluation will be part of a holistic IPO readiness assessment

Home or away?

The data we’ve gathered for our quarterly Global IPO trends report shows that on a long-term average, more than 90% of issuers list on their domestic stock exchanges, although they may sell shares abroad simultaneously.

A company’s home market is often regarded as the country in which it is incorporated. This is where companies usually go public, and it is here that investors tend to expect the listing. A company is intimately linked to the economy, culture, infrastructure, technology base and taxes of its home country. It is also committed to the relevant capital market regulations.

But a company can also be said to be at home in a market where people can best understand and evaluate its business model. As a result, the marketplace where many comparable companies are listed, which has sector-specific analyst expertise and which attracts investors in the sector, can also be regarded as a company’s home market.

Recently there have been many high-profile examples of businesses going public abroad. What's more, secondary listings are again on the rise – albeit with new motivations. And an additional stock exchange listing, particularly in emerging markets, is becoming increasingly important.

Understanding your options – and their implications

Selecting the right capital market, stock exchange and listing segment enables you to determine the regulatory requirements that your company will have to meet as a public entity. In the run-up to going public, your company’s internal structures (legal, tax, organizational) and units (management, accounting, IR) will have to be checked and prepared for the relevant requirements.

Other factors that motivate companies to go public outside their home market vary according to their country of incorporation. These include uncertainties regarding the listing process and waiting or processing times during the approval of the prospectus and the registration of securities.

A listing abroad is also likely to attract consumers’ attention to your company’s products and media presence. This can facilitate access to new markets and benefit your business operations – so it is likely to impact your valuation, but may also affect initial and ongoing costs.

Plus, of course, your shareholders may have their own preferences.

Making the right move

There are three self-contained regions for companies wishing to go public – EMEIA, Asia Pacific and Americas – but companies can choose from more than a hundred stock exchanges and listing options worldwide. Many stock exchanges from mature and emerging markets have improved their offering for companies looking to go public, so it can be worth shopping around to find the listing location that makes the most sense to help you achieve your goals.

Questions to consider include:

• Does it make sense to go public and have your primary listing in your company’s country of incorporation?
• Or should you look further afield?
• How mobile is your company on the capital market?

Finding the answers to these questions can pose complex challenges — particularly if you have identified strategic benefits to listing your company far from its familiar national market. Our IPO destination compass can help you identify some of the other key issues to consider, while our Guide to going public is designed to help you navigate the complexities of the entire IPO process, from planning to post-launch.