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TotalEnergies Contemplates US Listing as ESG Factors Reshape Markets

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Leo Gonzalez

May 15, 2024 - 13:58 pm

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TotalEnergies Weighs Potential US Listing to Woo American Investors

In what could significantly alter the European financial landscape, Euronext NV—a Pan-European stock exchange—is making concerted efforts to facilitate TotalEnergies SE in amplifying its appeal to the US investors, while retaining its European roots with the main listing remaining in its home continent.

Finding the Balance: TotalEnergies' Listing Plans

TotalEnergies, a titan in the energy sector, has publicly acknowledged its contemplation of a strategic shift of its primary stock listing from Paris to New York. This audacious move aims to shrink the valuation discrepancies observed between TotalEnergies and its US counterparts. Such a transition is not one Euronext is willing to watch without action, as the exchange attempts to avert this shift.

Stephane Boujnah, the CEO of Euronext, confidently expressed in an interview on Bloomberg TV his belief that they can conjure technical solutions to persuade Total to stay listed in the region, citing significantly better liquidity in Europe than the US for the company.

Euronext, which oversees multiple stock markets including those in Paris, Amsterdam, Brussels, Dublin, Lisbon, and Oslo, has observed that European bourses are grappling to retain corporations that are increasingly lured by the prospect of obtaining higher valuations through the expansive investment pools in the US. For the petroleum industry, especially, this attraction is potent as Wall Street investors traditionally maintain a more favorable stance toward Big Oil, often sidelining environmental, social, and governance (ESG) considerations more so than their European counterparts.

The TotalEnergies headquarters in Paris

Corporate Strategy Above Sentiment

Patrick Pouyanne, the CEO of TotalEnergies, unveiled plans for a rigorous study to explore the feasibility of the primary listing's move, with findings expected to be placed before the board in September. During his participation in a panel discussion at the Qatar Economic Forum, he put emphasis on the decision being purely business-oriented, sidelining any emotive factors.

Pouyanne has been quite forthright in drawing attention to the mounting pace of American investors' participation and interest in TotalEnergies, noting that presently the company could only present them with American Depositary Receipts (ADRs) rather than shares. On the flip side, European, including French, shareholding has dwindled, possibly reflecting the heightened discourse around ESG frameworks.

This contrast in valuations between markets places the board in a position to seriously consider the US shift, a fiduciary obligation Pouyanne stressed on.

Rising ESG Tides Influence Investor Appetite

ESG metrics have been a pivotal factor in influencing investor interest, with European investors increasingly aligning with these requirements. Total's peers in the US enjoy richer valuation multiples owing to a more accommodating investor segment for oil and gas industries. This is starkly contrasted by the European investor base whose preferences are evolving.

Such trends are reinforced by actions from significant financial institutions like BNP Paribas SA, the European Union’s largest bank, announcing a step back from participating in conventional bond issuances for the oil and gas sector as part of ramping up restrictions on its fossil-fuel clientele.

While TotalEnergies deliberates over whether the broader investor base and potentially higher valuation justify a re-listing across the Atlantic, other major players share similar valuation concerns but differ in outlook. Shell Plc CEO Wael Sawan has expressed that despite trading below what he perceives as "fair market value," a mere change in listing would not resolve core valuation matters.

France's Reaction to Total's Potential US Move

The possibility of TotalEnergies relocating its primary stock listing across the Atlantic has not gone unnoticed by French leadership. French President Emmanuel Macron has not shied away from showing his clear disapproval of any such decision by TotalEnergies, stating that he would be quite displeased if the energy firm opted to transpose its listing to New York.

Boujnah of Euronext added that the dynamics of ESG adherence are altering the landscape of investments, particularly in the European market, minimizing attractions to sectors such as oil and gas due to the stringent nature of ESG fulfillment.

A Conclusive Plan in the Offing

Come September, all eyes will be on the resultant finding that will be disclosed to TotalEnergies' board. The outcome, informed by broad considerations and thorough studies, will weigh heavily on the company's strategic direction and potentially on the stance that European exchanges hold in the global financial market.

Complementing the discussion and analyses is Bloomberg's detailed feature titled "TotalEnergies Has Plenty of Reasons to Say ‘Au Revoir, Paris’". This report, which delves into the intricacies of TotalEnergies' considerations, provides extensive background and a comprehensive understanding of the factors propelling the potential shift in listing.

To provide readers with a more in-depth understanding of the topic, assistance for this article was partially provided by Julien Ponthus.

Image of Bloomberg article

This article reports according to materials furnished by Bloomberg L.P., a pre-eminent name in financial journalism and reporting. The news piece as a whole seeks to encompass the multifaceted effects such a listing change would have, touching on business innovation, market analyses, and geopolitical impacts.

Overview of the Complex Dynamics

The scenario at hand is indeed complex, touched by market dynamics, investor behavior, and overarching ESG principles which are profoundly restructuring how businesses and investors make decisions. In tandem, national interests and the subtle undercurrents of geopolitical sentiments also have their roles to play.

The Potential Aftermath of Total's Decision

While the anticipation builds over the decision TotalEnergies might take concerning its primary listing, the aftermath of such a resolution could chart a new direction not only for the company but also for the European stock markets at large. This move, if realized, may prompt other companies to reevaluate their position concerning US and European markets.

In conclusion, as TotalEnergies introspects on bridging the valuation gap through a possible US listing, the European financial world watches keenly. The decision underscores the evolving priorities of global investors and the pressing nature of ESG considerations in today’s market sentiment. The implications of such a transition hold significance—not solely for TotalEnergies but for the larger narrative of global economic movements and trends.