Foreign investment firms are leading a $152bn blitz on the London Stock Exchange as they take advantage of the weak pound and City short-termism to snap up a string of unloved British companies. Tens of billions of dollars of cash is sitting in the coffers of private equity funds that can be used to takeover undervalued listed UK businesses which require long-term investment their current owners are unwilling to provide. Bookie William Hill and hotelier Whitbread are seen as prime candidates for a takeover. Among firms to spot an opportunity is the world’s largest private equity player Blackstone.
Rolls-Royce Holdings (RR.) the legendary British engineering company is turning to Germany to make a hybrid-electric engine for small planes which it hopes to have flying within two years. The business has teamed up with German aerospace design company APUS and Brandenburg university for the project, which uses a hybrid power system in which a jet engine generates electricity to power motors which then turn propellers. Research to develop the environmentally-friendly aircraft is being funded by the Brandenburg state government and European Union regional development funds. Experts said the decision to pick German over the UK is a sad indictment of British appetite for engineering projects.
Intu Properties (INTU) has warned it is likely to seek extra cash from shareholders as the shopping centre firm battles falling rental income and struggles to sell assets. The Lakeside and the Trafford Centre owner is preparing to tap up the stock market for vital funds – but analysts said Intu’s tumbling share price could make it impossible to raise enough cash. Intu may need to raise between £1bn and £2bn, Kempen analyst Max Nimmo said. He added this would seriously reduce the percentage of the firm owned by existing shareholders, saddling them with major losses. Deutsche Bank warned there is a heightened risk Intu may not be able to raise enough money from investors to pay down its debts.
The chairman of Marks & Spencer Group (MKS) poured cold water on suggestions that its top brass could split its food and clothing and home business after a slump in half-year profits at the retailer. Archie Norman, the retail veteran who revived Asda’s fortunes in the Nineties, said: “Look, no, that’s not our plan. Nothing is forever, but if you take it too far, you’re going to lose a lot of cost and a lot of brand value in the business.” Chief executive Steve Rowe, who is an M&S lifer, has made the executives running the two divisions more responsible for their performance. However, he ousted Jill McDonald, the clothing boss, in July after the retailer was left out of stock in February.
City bankers who fought off a hostile bid for the London Stock Exchange Group (LSE) will share in a bumper payday of up to £280m if its merger with Refinitiv is approved later this month. A string of top firms including Goldman Sachs, Morgan Stanley and Barclays (BARC) will get a cut of the cash, which has been set aside by LSE and Refinitiv bosses to pay fees for their £22bn tie-up. LSE shareholders will meet on Nov 26 to decide whether or not to approve the merger with data company Refinitv. It comes after a failed attempt by rival Hong Kong Exchanges and Clearing to crash the bid earlier this year.
A top hedge fund manager known as one half of the City’s “Posh and Becks” has been appointed as chairman of a fund house her husband Crispin Odey has been betting against. Nichola Pease – whose family helped found Barclays Bank, where her brother-in-law John Varley was formerly chief executive – will take over at Jupiter Fund Management (JUP) next March. The 58-year-old is married to Brexit-backing hedge fund chief Mr Odey, who was short-selling Jupiter’s shares as recently as Oct 31 when he had a bet against 0.66% of the stock, according to filings with the Financial Conduct Authority watchdog.
It was a poor session for companies exposed to the UK’s shaky retail industry yesterday, as a sharp fall for Intu Properties (INTU) sent shock waves through the wider sector. The shopping centre operator shares fell after warning it expected a hit to rental income. The predicted fall came after a slew of retailers launched company voluntary arrangement (CVA) processes in order to renegotiate their rents. Deutsche Bank analysts warned the impact from CVAs had been “worse than expected”.
