Dual listing refers to a company that decides that decides to list its shares on an exchange other than where it has its primary listing, normally this is to raise liquidity or increase visibility abroad.
Lower cost of capital, an expanded global shareholder base, greater liquidity, prestige and publicity are just some of the drivers behind a company’s decision to list their shares abroad. In addition, the aforementioned benefits surpass liabilities, taxes and various trading frictions and reconciliation of financial statements with home and foreign standards.
THE ADVANTAGES OF BEING DUAL-LISTED
The reason for pursuing or maintaining a dual listing vary from company to company and are generally dependent on a multitude of factors specific to each. However, at a ‘high level’ the main advantages and challenges include what is to follow.
Advantages include the following:
- Access to a larger pool of investors (depending on your secondary listing, these could be local or international)
- Increased liquidity, which is derived from operating in more than a single stock market (two listings doubles your company’s exposure)
- Much greater access to capital, which, depending on your secondary listing, could be in larger markets, particularly Europe or North America
- The potential to increase your opportunities for mergers and acquisitions due to broader exposure
- The ability to break through in to different markets at strategic times of your company’s growth and expansion, depending on macroeconomic conditions.
- More relevant peer and/or comparative market
- A higher or improved public profile
THE CHALLENGES OF BEING DUAL LISTED
While the advantages of dual listing your stock far outweigh the disadvantages, there are still certain challenges that your company will face when going down this route.
Challenges include the following:
- The initial costs that will be associated with your secondary listing (make sure you are aware of all of the cost implications)
- Ongoing costs associated with maintaining your dual listing
- Increased demands on your management team, such as committing time for more marketing, management etc.
- Practicalities of cross-marketing releases due to different time zones
- A potential increase in liability brought about by having to abide by another nations regulatory requirements
- Potential requirement for additional employees in the form of investment advisers and overseas-based directors
Each of these advantages and challenges will need careful consideration on your part. However, the ongoing successful of your secondary listing can be assisted through the implementation of a proactive investor relations team.
At Equity Alliance, we offer one of the best ways to gain international capital exposure. Dual listing is the process of listing a publicly traded company on one or more stock exchanges, and we offer companies the opportunity to list on one of the biggest in Europe, the Frankfurt Stock Exchange.
The Frankfurt Stock Exchange is the largest stock exchange in Germany, the third largest in Europe, and tenth largest in the world. With a market cap of US$ 1,776 billion, being listed provides companies with an excellent opportunity to international exposure. With our assistance, listing a company is a quick and hassle-free process, at a fee of 7000 EUR.
Want to learn more about this dual listing service? Contact Equity Alliance today.