Written by  Paul Berkowitz

On February 13, 2013, the United States Securities and Exchange Commission (“SEC”) issued a publication entitled, Accessing the U.S. Capital Markets — a Brief Overview for Foreign Private Issuers. ¹ The publication opened by stating that “[t]he U.S. capital markets have long been a favorite destination for foreign companies wishing to raise capital or establish a trading presence for their securities.” For a number of years, however, many non-U.S. companies have not seen the sale of debt or equity securities in the U.S. public markets as a viable means of raising capital. As a result of the significant regulatory changes brought about by 2012’s Jumpstart Our Business Startups Act, or the JOBS Act, we think this negative view is changing and non-U.S. issuers are beginning to refocus on the real benefits of becoming a publicly-traded company in the U.S. markets. Most significantly:

• An initial public offering registered in the U.S. provides access to one of the world’s deepest and most liquid capital markets;
• U.S. publicly registered equity often can be a valuable “acquisition currency” for stock-based acquisitions, particularly for companies with growth strategies that are fueled by acquisitions in the U.S.;
• A U.S. listing may allow certain capital structures not permitted on other stock exchanges, such as a dual class voting stock structure, which allows founders or other large shareholders to maintain voting control even if a majority of the economic value of the equity is sold to the public in the initial public offering or in follow on offerings and stock funded acquisitions;
• U.S. publicly registered equity can be used for incentive compensation for U.S.-based employees;
• Some evidence that cross-listing in the U.S. may lead to a meaningful valuation premium, through, among other things, increasing the pool of potential investors, higher corporate governance standards and enhanced disclosure obligations;
• A U.S. listing is often thought to increase the visibility of a corporation and its products and services, particularly in the U.S.; and
• U.S. public companies can typically complete subsequent equity or debt securities capital raising transactions quickly.
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