There has been some big news coming out of buy now, pay later (BNPL) pioneer Afterpay Ltd (ASX: APT) over the past week or so. The Afterpay share price is now up more than 22% since 31 March, but that kind of move is old hat for Afterpay investors.
No, I'm talking about the quarterly update that Afterpay provided to the markets last week, last Tuesday to be exact.
In this announcement, Afterpay gave investors what they would be used to by now. An update showing triple-digit payment volume growth, as well as a 75% growth rate in active customers. The company's presence in the United States and United Kingdom markets are growing well, and Afterepay continues to explore new markets.
Impressive as always, but also nothing we haven't seen before. However, something we indeed have never seen before from Afterpay was also floated last week. A potential US listing for the company.
Afterpay to list in America?
As we discussed last week, Afterpay made an announcement in its quarterly update that it was "exploring options for a potential US listing".
Here's what the statement said:
Afterpay is currently working with external advisors to explore options for a US listing given the US market is now the largest contributor to our business and is expected to continue to grow strongly…
While Afterpay intends to remain an Australian headquartered company, our shareholder base is increasingly becoming more globally focused. A US listing would further accommodate this growing interest…
There is no timeline set for a Board decision on a listing and any listing would be subject to market conditions, approval by a US exchange and satisfying a number of other customary listing prerequisites.
That's all.
However, this question of a US listing opens the doors to another question: What is going to happen to Afterpay's ASX investors if the company does indeed pack up and move overseas. Well, Afterpay isn't giving much away right now, as you can garner from the words above. But there are a few possibilities.
How will Afterpay shares look if they move to the US?
ASX dumped?
Afterpay could just delist from the ASX altogether, and become like that other Aussie tech company Atlassian Corporation (NASDAQ: TEAM). Aussies who want to invest in Atlassian simply have to buy shares on the US Nasdaq exchange, like they would for any other US company. There are no ASX-listed Atlassian shares.
If Afterpay did go down this path, it's even possible (if perhaps unlikely) that ASX investors might be forced to sell their ASX Afterpay shares. Following that, they would then buy the US-listed shares when they become available if they still want to own Afterpay. A likelier outcome is that ASX investors would have their ASX shares 'swapped' with the US version of the shares.
Dual listing
Alternatively, Afterpay could follow a full dual-listing structure, which companies like BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) already employ. For example, BHP lists on the ASX, as we all know. But it also has a US listing in BHP Group Ltd (NYSE: BHP), as well as a listing in the UK in BHP Group plc (LON: BHP).
All of these shares have a similar structure, albeit with different pricing.
CDIs?
Finally, Afterpay could employ a CDI model. A CDI (or Chess Depositary Interest) is not quite the same as a dual listing. Instead of the shares being officially available on an exchange, a CDI is a certificate of sorts that says you have a beneficial ownership right to shares on another exchange. An ASX example of this type of listing is Resmed CDI (ASX: RMD).
Resmed Inc (NYSE: RMD) is officially the company's 'true' listing. The ASX CDIs just allow ASX investors to buy those US shares on the ASX. But it will still be a US investment priced in US dollars. Thus, if Resmed's US shares don't change in value, but the Aussie dollar rises, the Resmed CDIs will fall in value.
This is another avenue Afterpay could go down.
Foolish takeaway
Whatever the outcome, it doesn't appear as though ASX Afterpay investors have anything to fear from the company's US listing aspirations. But we will have to wait for further updates on Afterpay's plans to really get a gauge on this situation. Watch this space!
