(Bloomberg) -- One of the top shareholders in flexible-office landlord IWG Plc has urged the company to pursue a range of measures to boost its share price, including a US listing.
IWG, which owns brands including Regus and Spaces, is undervalued and should also pursue a buy-back program, according to an open letter published Tuesday by Buckley Capital Management LLC. If those moves fail to galvanize the stock, the management should consider selling the business to private investors, it added.
A slew of UK companies have already shifted their listing to the US, prompting soul-searching among City grandees and a raft of reports urging lawmakers to boost the allure of British capital markets. IWG itself has already signaled a willingness to consider such a move, shifting to US GAAP accounting and reporting in dollars in a reflection of the fact that more than half its earnings come from North America.
Shares of IWG have plunged about 60% in London trading since the start of 2020, prompting Buckley to push for more radical measures.
“It is clear to us that there exists a significant dislocation between the current share price and the intrinsic value of the company, despite management’s efforts to improve communications and financial disclosures to the investor community,” Buckley said in the letter. “We believe that moving IWG’s listing to the US presents a strategic opportunity to enhance shareholder value and we support the company’s efforts to explore this option.”
Buckley cited the example of CRH Plc, a provider of building materials based in Ireland, as a successful case of a European company benefiting from a US listing. Since moving its primary listing to the US in September last year, CRH’s stock price has jumped more than 50%.
“We believe IWG choosing to re-list in the US would allow the company to garner a higher multiple and potentially use its stock as a currency for acquisitions,” Buckley said.
Miami based Buckley, which says it invests in small- and mid-sized companies with growth potential, began investing in IWG in 2023 as it rebounded in the aftermath of the coronavirus pandemic and the shift to flexible working that followed it. The investor, which says it is among the 15 largest holders of IWG, applauded IWG’s efforts to shift its strategy to capture the new growth potential, pivoting to a franchise model.
But those efforts have so far drawn little appreciation from other investors.
“If a US listing and share buybacks do not cause a significant re rating in IWG’s shares, we are convinced that management should explore a sale of the business in the private markets to realize the company’s intrinsic value,” it added.
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