A leading shareholder in International Workplace Group (IWG) has called for the co-working firm to quit its London listing and relocate to the US to boost its value.
Miami-based investment firm Buckley Capital Management, which said it was a top 15 shareholder of IWG, argued that the London market ‘misperceived and undervalued’ IWG.
“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 said.
The business added that it was concerned “efforts by IWG’s management to articulate the investment merits of the company have fallen on deaf ears” and that investors in the US would be more receptive to its potential.
In addition to immediately appointing advisors to proceed with a US re-listing, Buckley suggested IWG implement a share buyback programme as soon as it reaches one times net debt to earnings in order “to take advantage of the significantly discounted prices that exist today”.
The company suggested that IWG shares could achieve a 30 per cent internal rate of return on today’s prices, and that IWG could return over £2bn to shareholders through free cash flow and capital structure in the next four years.
Buckley said that IWG management’s decision to switch its reporting currency and adopt the US Generally Accepted Accounting Principles system, or GAAP, was a “step in the right direction”.
“If a US listing and share buybacks do not cause a significant rerating 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,” Buckley added.
Earlier this year, there was speculation in the market that the Swiss-headquarted IWG was weighing up a move to the US.
“The final step is to consider moving the listing from [the London Stock Exchange] to one of the US exchanges . . . that is certainly a consideration for the board and our investors at a later stage,” chief executive Matt Dixon said in March.
Shares in IWG have fallen by just over three per cent in the year to date and more than 50 per cent in the last five years.