haktutsspin2020| Total Energy (TTE.US) considers bidding farewell to Paris and moving its main listing location to New York

The CEO of TTE.US has every reason to confront the French government.Haktutsspin2020Because the company is likely to list its shares on Wall Street. Measured in dollars, these stocks could be worth tens of billions of dollars.

Zitong Financial APP notes that investors are often willing to pay much more for US stocks than for European stocks, a valuation discount that is particularly pronounced among big oil companies: European companies in the industry are 40 per cent cheaper than their counterparts on the other side of the Atlantic.

If Total's valuation is in line with the average of large US crude oil producers, its 160 billion euros ($172 billion) share market capitalization would increase by $115 billion based on price-to-earnings ratios.

Total Energy CEO Patrick Pouyanne says more and more problems stem from ESG. At a French Senate hearing last week, he said the discount was partly due to increasing pressure on European asset managers to invest in accordance with environmental, social and governance standards.

The latest example is a proposed French rule that only funds that blacklist fossil fuel companies that are still expanding production will be allowed to use national ESG tags.

Laurence Pessez, head of corporate social responsibility at BNP Paribas, said at a separate Senate hearing on Monday that under the rule, BNP Paribas's asset management arm would have to reduce its stake in oil and gas companies. Lawmakers from an environmental group organized the hearing to investigate whether the state ensured that Total Energy complied with France's climate obligations.

"the goal of BNP Paribas Asset Management is to retain these labels as much as possible, which will require a divestment of part of the oil and gas industry in which Total Energy is located," Pessez said.

Even as global demand for oil rises, European producers such as Total Energy, Shell and BP have diversified into renewable energy, which offers lower returns than hydrocarbons when crude oil prices are high. At the same time, competitors, including ExxonMobil and Chevron, have adopted aggressive growth strategies in the oil and gas sector, including through large-scale acquisitions.

1/3 of European mutual funds do not include fossil fuel companies, while very few American mutual funds hold this view, Deutsche Bank analysts said in a report in March citing Morningstar data.

Gilles Guibout, a fund manager at Axa Investment Management, said the controversy showed that Europe faces a broader problem: the lack of deep capital markets like the US. Forty-seven per cent of the company's institutional shareholders are now from the US, compared with 18 per cent in France, according to Total Energy.

"it would be a mistake to look at this only from the perspective of ESG; people have to step back and recognise that there is a broader problem in European equity capital markets," added the Axa manager. He points out that European pension funds are scarce and that retail investors on the continent are limited.

For years, this has prompted smaller European companies, particularly in growth industries such as technology and biotechnology, to list in the US in search of higher valuations and easier sources of financing.

But the loss of a national champion-even if its headquarters and company are still in France-would deal a bigger blow to European markets, and French Finance Minister Bruno Lemerre said he wanted to avoid that.

The fragmentation of continental capital markets remains a structural problem for the EU, and Total's move has put it back at the top of the agenda ahead of the European Parliament elections in June.

Lemerre said in an interview last weekHaktutsspin2020"We will build a capital markets alliance so that you can raise more money in Europe, especially for your energy transformation activities." He promised to try to keep Total's main Paris-listed company.

Although discussions on unifying EU capital markets have been going on for a long time, an agreement has been difficult to reach, and any solution may not be available in time for TotalEnergies: Pouyanne is studying the possibility of moving the company's main listing location to New York and will present its findings to the company's board in September.