Shares in newly floated Saudi Aramco surged by 10 per cent yesterday as the world’s biggest initial public offering was hailed as a success by the government in Riyadh. The state-controlled oil giant closed at 35.2 riyals ($9.39) on the first day of dealings on the Riyadh stock exchange after rising by the maximum permitted under local rules. It gave Saudi Aramco a market value of almost $1.9 trillion, confirming it as the world’s most valuable listed company, well ahead of $1.2 trillion Apple. It is larger than the five biggest multinational oil companies combined. Saudi Aramco priced its IPO last week when it raised a record $25.6 billion, more than the $25 billion raised by Alibaba, the Chinese technology group, in 2014.
Neil Woodford’s former protégé has been sacked as the manager of the £1.3 billion Edinburgh Inv Trust (EDIN) after a prolonged period of underperformance. The sacking deepens the turmoil surrounding Mark Barnett, the Invesco stockpicker. Last month he was forced to publicly apologise for the poor performance of two other funds he runs at Invesco after Morningstar, an influential research firm, raised concerns about the portfolios. Mr Barnett, 49, has come under scrutiny after his former mentor became engulfed in crisis. He previously worked closely with Mr Woodford, who spent 26 years at Invesco before leaving in 2014 to set up on his own.
Stagecoach Group (SGC) has rearranged the seating on its top deck with founder Sir Brian Souter stepping down as chairman to become a non-executive director while sister Dame Ann Gloag leaves the board completely. The company yesterday revealed how much it has shrunk since its withdrawal from the US and its forced departure from railways in Britain, and how it now intends to start growing again with plans to enter the European passenger transport market. News of the moves by Sir Brian, 65, and Dame Ann, 77, who between them own nearly 25% of the company, fuelled speculation in the City that he may be hatching a buyout of the company.
M&C Saatchi (SAA) is aiming to hire four new independent directors by the end of next month in an attempt to stem the turmoil at the advertising company. Sources said the company has accelerated its search for fresh non-executives after four board members resigned on Tuesday, including Lord (Maurice) Saatchi, its co-founder. Jeremy Sinclair, 73, chairman, hopes to have agreed the new hires by the end of January, the sources said.
António Horta-Osório has promised that Lloyds Banking Group (LLOY) will “reflect, listen to our customers and change” after a critical review of how the lender treated fraud victims. The chief executive of Lloyds apologised “unreservedly” for the bank’s failings in a letter to Kevin Hollinrake, the former MP who has campaigned on behalf of small business owners whose livelihoods were damaged or destroyed by the HBOS Reading scam. Mr Horta-Osório promised to work with victims, their representatives and the City regulator after an independent review of the bank’s compensation scheme for those who lost out to the £1 billion crime found that it had not led to fair or reasonable outcomes.
A twice-bitten turnaround specialist has been hired to lead a third embattled company, Saga (SAGA). Euan Sutherland was named yesterday as chief executive of the insurance-to-cruises group for the over-50s. He replaces Lance Batchelor who announced plans for his departure in June after a profits warning. Mr Sutherland, 50, quit Superdry, the fashion retailer, in April after shareholders in effect gave him the thumbs-down by approving a boardroom coup that restored its co-founder Julian Dunkerton to the business. In 2014 he abruptly left Co-op Group, where he had been chief executive for only ten months, after a row with its 22 directors. He said that the mutually owned group was “ungovernable” after details of his £3.6 million pay packet were leaked.
Strong cashflows from being the self-styled fourth emergency service will mean that AA (AA.) begins to address its debt mountain, a legacy from its flotation by the private equity funds CVC and Permira five and a half years ago. The news that trading has been good and that it is dealing with a £2.6 billion borrowing millstone took shares in AA off their recent lows. The company has a turnover of just under £1 billion a year turnover and profits of little more than £100 million.
A row has broken out between Mike Ashley’s and Harrods over the closure of a House of Fraser department store in Milton Keynes. Sports Direct, which promised to turn House of Fraser into the “Harrods of the high street”, is shutting the outlet in Milton Keynes shopping centre and blaming the Knightsbridge store for the resulting 172 job losses. Mr Ashley, chief executive of Sports Direct, claims that he has offered to redevelop the House of Fraser in the Centre MK, or take only part of the store, but that Harrods, which has a legacy to the lease, has thwarted his efforts because it wants part of the store back for its new H Beauty concept. Harrods was bought by House of Fraser in 1959, which in turn was bought by Mohamed Fayed in 1985 before being separated into a private business in 1994. Harrods has a historical lease contract which means that if the Milton Keynes store becomes vacant the lease reverts to Harrods.
Europe’s biggest travel group is to cut its dividend to give it the resources to counter the challenging market and invest in growth. TUI AG Reg Shs (DI) (TUI) said that for the year to the end of September it would pay a dividend of €0.54 a share, down from €0.72 last year, in line with its policy of benchmarking the payout in line with underlying earnings, which were lower. From this financial year onwards, however, Tui, an Anglo-German group, said that it would realign its dividend policy and pay out 30 to 40% of its underlying earnings, with a minimum payout of €0.35 a share. Fritz Joussen, its chief executive, said that the change would give the group scope to invest in its digital strategy.
DWF Group PLC (DWF) said that it had agreed to buy Rousaud Costas Duran, an independent Spanish firm with offices in Madrid, Barcelona and Valencia. It will pay up to £42.5 million in shares and cash and expects the deal to be accretive to adjusted earnings per share in the first financial year after completion. Andrew Leaitherland, chief executive, said that the deal would provide a network across the Iberian Peninsula and Latin America.
The biggest investor in JD Sports Fashion (JD.) has sold a stake worth almost £180 million, putting the company’s shares under pressure in a rare blip for one of the retail sector’s star performers. Pentland Group, which has had a holding in the retailer for the past 14 years, offloaded 24 million shares, equivalent to 2.47% of JD Sports’ shares, in a 740p-a-share placement. The privately-owned group remains the company’s largest shareholder, controlling 55% of the business. It has committed to not reducing its stake below 50%.
Majestic Wine (WINE) is to kickstart store openings after the completion yesterday of the acquisition of the chain by Fortress Investment Group, of America, from Naked Wines for £95 million. John Colley, who has returned as executive chairman two years after leaving the group, said that he had earmarked a small number of locations, including St Andrews, Marlow and Henley. He said that the group, which has 197 stores across the UK plus two in France compared to a peak of 213, would also seek new sites in prime locations where it was forced to give up the property. He cited its Blackheath store, which opened recently as a replacement for its Greenwich outlet.
Investors looking to take a punt on Hiscox Limited (DI) (HSX) after its recent share price fall and subsequent demotion from the FTSE 100 should think again, says Numis, the City stockbroker. Shares in Hiscox have plunged by a quarter since the summer, which could lead some to think that they are now an “attractive prospect”. But don’t be fooled, warn Numis analysts. “We feel downside risk remains prominent, most notably in the form of potential capital strain if there are further earnings setbacks over the next 12 months, [such as] catastrophe events or reserve shortfalls,” they said in a research note. The analysts cut their recommendation to “add” from “hold”, which is still more bullish than their peers at Investec. The number-crunchers there repeated their “sell” recommendation, claiming that Hiscox’s share price, based on its current earnings forecasts, is “untenable”.
SSP Group (SSPG) rose 8p to 645p after it was upgraded to “overweight” by Morgan Stanley. Issues, including weakening like-for-like sales and slowing margin growth, have kept the shares in a tight range, but Morgan Stanley thinks it can be a “high-flier” once again. Not only do the analysts think it can repeat last year’s organic sales growth of about 8%, but they also expect margins to come in better than the market is forecasting. “Guidance for flat margins would break a decade’s track record of expansion,” it said. “SSP has always exceeded its margin guidance, has a strong culture of efficiency gains, and we suspect the new CEO is being understandably conservative.”
The market capitalisation of Petropavlovsk (POG) jumped above £400 million, for the first time in seven years. Its share price has more than doubled this year and they were up another ¾p, or 6.8 per cent, yesterday to 13p. The surging gold price has been behind the rise.
Kromek Group (KMK) value jump by a quarter after it posted a bumper set of first-half results. Revenues over the six months to the end of October rose by 43% to a record £5.3 million, driven by increased demand for its DS3 radiation detector, used to detect dirty bombs.
Tempus – Marks & Spencer Group (MKS): Buy. Inexpensive play on a recovering retailer that would shine again if its latest turnaround works
Tempus – Aggreko (AGK): Hold. Global leader in its field that still has growth options
