Issuing shares in another market can broaden a company’s capital base and enhance its profile, but there may also be downsides to dual listings.
A stock market listing can be a turning point in a company’s development, providing an opportunity for early investors to realise some of their investment and to be joined by new investors, perhaps looking for a different balance of risk and reward.
The fresh capital and enhanced profile can give a company a big push towards realising its growth ambitions. Yet there are also downsides in the form of increased administration and costs. It can be a delicate balance. But if one listing is hard to weigh, spare a thought for the companies that decide to do it all twice.
The rationale for a second listing is typically the “same but more” as the first. Most obvious is the access to a fresh pool of capital. A company may have reached the limits of investor interest on the ASX, but a further listing can put it in front of new investors, perhaps with deeper pockets.
Mesoblast raised US$68m when it took a secondary Nasdaq listing in 2015. It has since raised further equity to support its stem cell therapies development. “The US has a large pool of dedicated healthcare funds, whereas funds in Australia tend to be more generalist,” explains chair Jane Bell AM FAICD. “So our Nasdaq listing gives us access to those specialist funds, some of which will only invest in companies with a US listing.”
Immuron, a developer of polyclonal antibodies targeting gut-mediated diseases, has also taken advantage of that specialist investor interest, raising US$6m when it listed on Nasdaq in 2017, and a further US$20m in 2020.
“The primary benefits of our Nasdaq listing have been access to capital as well as greater price appreciation and trading volumes following positive milestone announcements,” says director Dr Jeannie Joughin GAICD.
Spoilt for choice
The Nasdaq is a natural choice for many, being the second-largest stock exchange in the world by market capitalisation, behind the New York Stock Exchange, with a particular reputation for tech companies. Resources companies often tap into specialist interest for mining and energy companies on the Toronto Stock Exchange in Canada.
However, some companies may have specific reasons for listing in particular countries. Vulcan Energy, for example, is developing a combined facility harnessing renewable geothermal energy for lithium production in the Upper Rhine Valley in Germany, so has opted for a secondary listing on the Frankfurt Stock Exchange.
“A lot of our stakeholders are in Germany, including over 300 employees,” says Vulcan’s executive director and CFO Felicity Gooding GAICD. “So it’s really important to us that we’re an Australian and a German company. The Frankfurt listing really complemented the brand and corporate identity that Vulcan wanted to achieve.”
It’s important for directors to understand the different characteristics of investors in different markets. “European institutions and family offices tend to invest in more mature companies, whereas investors in Australia and the Asia Pacific have an appetite for earlier stage opportunities,” explains Gooding. “At the moment, the vast majority of our capital has been from Australia and the Asia Pacific, but we expect the European interest to grow as our project matures.”
A secondary listing can also make it easier to provide incentives for employees in overseas locations. Mesoblast, for example, uses its Nasdaq-listed stock to provide incentives in the US and Bell considers it a “significant incentive for employees to come on board”.
ASX dual listings in 2023 included the following companies:*
$68.6b
Newmont, US
$5.2b
Capstone Copper, Canada
$10.9b
Arcadium Lithium, US
$1.4b
Freightways, New Zealand
$8.5b
Light & Wonder, US
$1.2b
Metals Acquisition Ltd (MAC Copper Ltd), Australia
*Total market cap at listing (AUD)
Source: ASX
Ground Xero
The impact of a dual listing on the liquidity of a company’s shares is more nuanced. By accessing additional pools of capital, liquidity may be enhanced. But it is also split in two and, beyond a certain size, that can make it harder for larger investors to buy significant amounts of stock. So a company’s stage of growth may be an important factor. Accounting software provider Xero, for example, was founded in Wellington in 2006 and listed on the New Zealand Stock Exchange in 2007, before adding an ASX listing in 2012. The dual listing served the software provider well in its early stages of growth, giving it access to a larger pool of capital and, according to the company, offering “‘improved visibility, product awareness and marketing opportunities within Australia”.
In February 2018, Xero consolidated its listing onto the larger exchange, to make it easier for investors to trade shares in greater volumes, broaden analyst coverage and allow for potential inclusion in sharemarket indices. Average daily trading volumes tripled and the company was added to the S&P/ASX 100 in March.
“Xero’s experience in moving to a sole ASX listing has been positive,” says outgoing CFO Kirsty Godfrey-Billy GAICD. “We set objectives, including a larger range of investors, increased liquidity and an increase in investor and analyst interest. These have all been achieved.”
As well as broadening a company’s investor base, a dual listing can raise its profile with customers, suppliers and regulators. This can be a key reason for healthcare companies to list in the US, for example, where approvals from the US Food and Drug Administration can be so pivotal. Mesoblast and Immuron are both conducting multiple clinical trials in the US.
“Australia is a long way away, so the US market is not quite sure of Australian companies,” says Bell. “But a Nasdaq listing means the US market knows, at the very least, that Australian Nasdaq-listed companies are meeting those regulations.”
More cost, more red tape
An important downside of a secondary listing is the additional complexity and cost. For Immuron’s Nasdaq listing, for example, Joughin picks out listing fees, reporting costs, US audit costs, US investor relations expenses and increased directors and officers (D&O) insurance. Filings will need to be made to both exchanges, although there may be streamlined rules in some cases.
“As a foreign private issuer on Nasdaq with less than half its shares owned by US investors, Immuron can use form 6-K to file its ASX material announcements directly to the Nasdaq,” says Joughin. “And it can use the simpler form 20-F for annual reports instead of the usual 10-K.”
Mesoblast also qualifies for the streamlined US filings and both it and Immuron use US form 20-F as their Australian annual report.
For Vulcan Energy, Germany and Australia both use international reporting standards, so there are significant areas of overlap.
“We only need to file one annual report and one half-yearly report, and we only need one audit opinion,” says Gooding. “But there are different requirements around the discussion and management analysis, so we end up submitting an additional management report in Frankfurt. There are areas of alignment, but also areas that are different. It’s important to have advisers for both markets. Fortunately, since we have substantial operations in Germany, we already have those advisers in place, which helps keep the costs down.”
How the pros and cons balance will depend on the individual company and the exchanges it is considering. “Like any strategic decision, you need to weigh up the long-term benefits and risks,” says Gooding. “You need to look at the one-off and ongoing costs, and consider the impacts on the organisation and how a dual listing would support the future strategy of the company.”
This article first appeared under the headline ‘Double down’ in the February 2025 issue of Company Director magazine.
Latest news
Already a member?
Login to view this content