Software giant Sage has become a rare beast in recent years – a highly valued technology company still listed on the London Stock Exchange.
Worth around £11bn currently, the Newcastle-headquartered group is a firm member of the FTSE 100 index and showing no signs of its growth slowing down.
But while Sage has stuck to its UK roots, its fellow technology companies based in the country have either been snapped up by their American counterparts or chosen to list across the Atlantic instead of on the London Stock Exchange.
The likes of Arm chose to list on the Nasdaq in 2023 while Wise announced earlier this year that it would move its primary listing from London to across the pond.
While headquartered in the North East of England, Sage has a sizeable global presence, particularly in the US.
Speaking on an up-coming episode of City AM‘s Boardroom Uncovered podcast, Sage’s CEO Steve Hare addressed whether he could see the FTSE 100 group ever jumping ship from London to New York.
Sage CEO’s ‘northern stubbornness’
Hare said: “I’ve been asked many, many times, why are you still here? Why don’t you list in the US, why don’t you sell to private equity, etc..
“Most of our competitors are American and nearly half our business is in North America.
“We compete against the big American players every single day and we win.
“This idea that somehow you can’t be successful unless all the ideas come out of the US – there’s this part of my northern stubbornness, I suppose, that wants to prove that wrong.
“That’s not in any way to be negative about what’s coming out of the US because we have engineers in the US – we have lots of great stuff that’s coming out of the US.
“But some of our best talents and some of our best engineering talent is in Newcastle, in Barcelona, as well as the US.
“So we feel that compared to our competitors, we’re more global.”
Why move from London to New York?
Each company will have their own reason to either move their listing from London to New York or to accept a takeover offer from a US counterpart.
For Sage’s CEO, there appears to be no real upside for making a switch in the near-term.
Hare said: “What you have to look at is, what’s the reason? We don’t have any issue with access to capital.
“So we can access the capital we want. We’ve done bond raises. No issue there.
“So the only real reason for considering listing in the US is if you thought you would access a different investor base or if you thought the valuation would change.
“We already have close to 40 per cent of our shares owned by US funds, so they don’t need us to list to buy our shares.
“I think we are valued fairly for the position that we’re in.
“If you look at the FTSE 100 there are examples, whether it be Rolls-Royce, that when you deliver a great story – and the key word, is deliver, not just talk about it and post the vision – when you deliver the market rewards you.
“You can’t predict what will happen in terms of the markets over the next few years but as we sit here today, I see no advantage whatsoever of going to the US.
“The other thing as well, you have to remember about the US, which people forget is here in the UK we are a member of the FTSE 100 index.
“If we went to the States we wouldn’t get in the index, we’re too small, we’re tiny.
“On the Nasdaq we would be a small cap software company whereas here we’re FTSE 50.”
‘Tell your story better to boost your valuation’
Elsewhere in the Boardroom Uncovered episode, the CEO of Sage said companies listed in London need to tell their stories better and deliver for investors if they are to boost their valuations.
Hare said a lower number of competitors listed in London means that investors frequently have to look across the Atlantic to compare a firm’s performance.
The CEO added that public companies can combat investor confusion by making sure that they have a clearer message which can then be delivered on – something which he said will lead to valuations in London being improved.
He said: “I think maybe the thing that makes the London market a little bit more difficult is you don’t have the same peer groups.
“If you take Sage, we are the only technology company really now listed on the FTSE and we’re certainly the only software technology company.
“So what that means is that when people are looking at comparators, they do have to look to the US.
“I think if investors don’t understand the story, then you can start to get dislocation in terms of the valuation.”
When asked what his company does differently, Hare added: “So the approach we take in Sage is we put a very significant amount of effort into explaining what we’re doing, what our growth story is, what our investment cases are, both to investors but also to analysts.
“What’s really important is that the story is consistent.”