At midnight last night AstraZeneca switched its US listing from the NYSE to Nasdaq, with the growth of passive investing playing a role in the decision to switch stock exchanges.
There are ‘three key factors that influenced the decision: cost, branding & perception and index participation,’ says Thomas Kudsk Larsen, head of IR at Cambridge-headquartered AstraZeneca, which is currently partnered with Oxford University in the hunt for a viable vaccine against Covid-19.
‘Overall, it is cheaper for us to be on Nasdaq,’ he explains to IR Magazine. ‘We are moving everything – bonds and equity. And while it is more expensive for the bonds, it is cheaper on the equity and [between them] we’re saving quite a bit. It’s not a reflection on the NYSE.’
He stresses the ‘great relationship’ AstraZeneca has had with the exchange and the designated market-maker IMC Trading for many years. ‘For some companies it is a better home than it is for us right now,’ he adds.
But with AstraZeneca’s main listings in London and Stockholm, and ADRs and debt securities in the US, costs add up. ‘We do have to think about what are we spending on listing fees – we owe that to our shareholders and to the company,’ says Kudsk Larsen.
The firm is also looking to rebrand a little, going for a more laid-back, cool biotech vibe that is perhaps a better fit with Nasdaq.
‘For us, the NYSE is maybe a bit more about more established, blue-chip companies and we want to change the perception of AstraZeneca a little bit,’ Kudsk Larsen explains. ‘We want to be more about science and biotech, to have more of that biotech culture: not to be in suits and shirts but more T-shirts and jeans. So we think there’s a better fit for that between us and Nasdaq than us and the NYSE.’
But it’s the third point that is most important to Kudsk Larsen as head of IR: the NYSE doesn’t allow foreign-owned entities to be included in its indices. By moving to Nasdaq, AstraZeneca gets that inclusion – and greater access to the already huge and growing world of index investing and passive money.
‘Those indices are of course tradable and investable and that means there will be more investments coming into our equity,’ Kudsk Larsen explains. ‘We’ve done some math here at AstraZeneca and the equity we will get from index participation at Nasdaq is probably worth as much as a top 10/top 20 shareholder.’
So why now? ‘It’s something we have wanted to do for a while but we needed to get internal support, which takes time in a big company,’ he says. ‘Once we brought it to the board, however, it was a short discussion because we had done a thorough analysis beforehand: the board trusts that if we propose something, it is the right thing to do.
‘Then we used the lockdown, where we were working from home and not traveling as much, to invest in our set-up. We invested in changing the US listing, we have spent quite some time improving our IT infrastructure in the IR team, we have been cleaning up all the things you don’t have time to do when you’re traveling. We tried to turn Covid-19 into an upside for us.’
A look back at AstraZeneca's time on the NYSE