Private equity circles London firms; early FTSE gains fizzle

(Evening Standard)

Blue-chip shares have continued their recent progress after the FTSE 100 index posted its fourth successive weekly gain on Friday.

London’s top flight returned above 7900 this moning as the banking turmoil that brought volatile conditions only a month ago fades.

Companies reporting today include defence technology specialist Qinetiq and the recruitment firm Page. It also emerged this morning that FTSE 250-listed oil engineering consultancy Wood has opened takeover talks with private equity firm Apollo.

FTSE 100 Live Monday

  • Private equity circles FTSE 250 firms

  • FTSE 100 above 7900 amid strong run

  • Page Group says UK jobs market “tough”

City comment: CBI has lost any right to speak for British business

13:31 , Jonathan Prynn

In the confusing and fast moving post-Brexit world there has rarely been a more crucial time for Britain’s private sector to be represented by a credible, respected organisation that speaks authoritatively for companies large and small in the corridors of power.

Yet remarkably for now that body does not exist. A week on from the dramatic sacking of Tony Danker over misconduct allegations, the CBI is no closer to restoring its bona fides. If anything it is further away.

Not surprisingly no politician or senior business figure will go near the CBI, forcing it to cancel its entire events schedule for the foreseeable future.

FTSE’s morning gains fading

13:24 , Daniel O’Boyle

Most of the FTSE 100’s gains this morning have slipped away, with the blue-chip index now up by less than 0.2% to 7,886.29.

Though the index reached as high as 7915.59, it has since slipped and is now close to where it started the day.

Among the biggest losers so far today are Melrose Industries and Barclays.

ASDA rolls out self-driving grocery deliveries for 72,000 west London households

13:19 , Daniel O’Boyle

ASDA today launched self-driving grocery deliveries for 72,000 households in West London, as part of a trial that could be a first step towards nationwide autonomous supermarket deliveries.

Story continues

The Issa brothers-owned supermarket giant will partner with self-driving car tech startup Wayve as part of a 12-month trial for customers of the Park Royal ASDA Superstore.

While the vehicles used for deliveries will drive themselves, both an ASDA employee and a Wayve safety driver will still be in the car, with the ASDA employee unloading the groceries.

Read more here

Government considers proposals to make renewables greener and more innovative


The Government is considering new proposals which it hopes would speed up the roll-out of renewable energy, cutting emissions and increasing energy security, but which may also add to household bills.

If adopted, officials might consider whether a project will help create more sustainable supply chains, innovate, or encourage job creation on top of considering the cost of delivering electricity from the wind or solar farm or tidal energy project.

Read more here

Apollo approaches The Hut Group over takeover

10:46 , Daniel O’Boyle

A third private equity deal for a London-listed firm could be in the offing, this one also involving Apollo.

The Hut Group said it has received a “preliminary and non-binding proposal” for its shares from Apollo.

THG shares jumped 30p to 96p on the news. The battered stock was nearer 800p back in early 2021.

That follows news from John Wood Group and Network International that private equity takeovers could be nearing fruition.

Royal Mail shares higher, Tesco upgrade boosts FTSE 100

10:15 , Graeme Evans

A breakthrough in Royal Mail’s long-running industrial dispute today gave a lift to shares in owner International Distributions Services (IDS).

The FTSE 250-listed stock initially threatened the 250p threshold for the first time since November before later settling 5% or 11.8p higher at 243.4p.

The interest in IDS shares followed Saturday’s preliminary agreement with the Communication Workers Union over new pay and employment conditions that can now be put before the union’s leadership and then membership for approval.

The terms of the proposed deal have not been disclosed, with Liberum analyst Gerald Khoo seeing no reason to change his “sell” recommendation or 135p target price.

He said: “We do not yet know what concessions Royal Mail management has had to make to get this deal over the line, but they are likely to be considerable. Even with a deal in hand, the execution and implementation risk is very high, in our view.”

The company’s shares were 630p during pandemic lockdowns in April 2020 only to fall below 200p as the company warned the strike disruption would contribute to Royal Mail losses topping £350 million.

The performance of IDS and takeover developments at Wood Group and Network International meant another strong mid-cap session as the FTSE 250 index climbed 0.6% or 108.49 points to 19,351.18.

Defence technology group Qinetiq lifted 4% or 15.8p to 367.4p after it said an “impressive” fourth quarter performance had left annual results ahead of its previous guidance and at the upper range of City forecasts.

The Hampshire-based company reported a 40% jump in its order intake for the year to 31 March to a record high of more than £1.7 billion.

The FTSE 100 index, which on Friday posted its fourth consecutive weekly gain, added another 33.79 points to stand at its highest level since early March at 7905.70.

Blue-chip risers included supermarket giant Tesco, up 4p to 272.2p after analysts at UBS raised their target price to 300p following last week’s results. Electronics components supplier RS Group also benefited from a City upgrade, causing its shares to lead the risers board with a gain of 19.6p to 868.6p.

Investment giant Apollo launches new European HQ in central London

09:58 , Joanna Hodgson

US investment giant Apollo has opened a new European headquarters in central London and said offices remain “important’ post-pandemic.

The private capital manager has launched a new European hub at 1 Soho Place, with 88,000 square feet that can accommodate over 400 employees. It is bringing together teams from two existing London offices totalling 56,000 square feet.

Rob Seminara, partner and head of Europe at Apollo told the Evening Standard: “We have more capital to deploy than ever with European-based teams managing nearly a quarter of Apollo’s $548 billion (£441 billion). We were clearly running out of space before.”

Read more here

Private equity eyes UK stock market

09:39 , Simon English

TWO takeover deals of stock market listed companies worth £3.7 billion neared fruition today, with analysts saying many more bids are likely as private equity funds hunt for cheap UK companies.

Payments provider Network International said this morning it had received a £2 billion, 387p a share offer from CVC Capital and Francisco Partners. That is 28% higher than the Friday closing price and much better than earlier rejected offers.

Meanwhile oil and gas firm John Wood said it will engage with Apollo Management on a £1.7 billion, 240p a share bid. It has turned down three lower offers but now seems keen to strike a deal.

By some analysis US private equity funds are sitting on around $2 trillion of cash, nearly enough to buy the FTSE 100 in its entirety.

With UK shares unloved and new stock market floats thin on the ground, City watchers say more bids from private equity are likely.

Read more here

Quiz shares tank on sudden debt drawdown

09:16 , Simon Hunt

Shares in Quiz plunged 20% this morning after the fashion brand’s debts unexpectedly rose and it offered no revenue forecasts for the year ahead due to “significant pressures” on consumer spending.

The firm posted a 17% rise in turnover to £91.7 million amid a bounce-back in in-store shopping, and said pre-tax profits would hit £2 million. However, its net cash balance sunk from £9.2 million in january to £6.2 million amid a drawdown on its credit facilities, which are set for renewal in a matter of weeks.

Quiz warned the “widely reported and significant pressures on consumer spending seen in recent months” would “impact consumer demand across the Group’s sector over the coming months, reducing its visibility” for the forthcoming financial year.

The stock is down 93% since its 2017 London IPO.



Brexit a big factor in companies snubbing London for New York, says senior economist


Brexit has been a “big contributing factor” in companies snubbing the City of London and listing in New York, a senior economist said on Monday.

Simon French, Head of Research at Panmure Gordon, said UK stock market valuations had slumped since the 2016 vote to leave the EU.

Mr French said that while US valuations were higher because of other factors such as its greater proportion of high value tech companies, the impact of Brexit could not be ignored.

Read more here

FTSE 100 above 7900, Royal Mail owner up 7%

08:17 , Graeme Evans

The FTSE 100 is above 7900 for the first time in over a month following a rise of 0.4% or 35.20 points today. Banking stocks Barclays and Lloyds are in positive territory, with others on the front foot including Rentokil Initial with a gain of 1.2p to 595.8p.

The FTSE 250 index lifted 0.5% or 102.1 points to 19,344.79 after Network International said it was “minded to accept” a £2 billion private equity takeover and Wood Group entered talks with Apollo over a potential offer.

Network International surged 20% or 62p to 365p and Wood rallied 7% or 15.2p to 227p.

International Distribution Services jumped 7% or 15.2p to 246.8p after the Royal Mail owner and union leaders revealed progress at the weekend towards an agreement that will end long-running strike action.

Sega to acquire Angry Birds maker Rovio for 706 million euros

08:00 , Simon Hunt

Videogame giant Sega has made an offer to take Angry Birds maker Rovio private in a deal that values the company at 706 million euros (£624 million).

SEGA aims to acquire the entirety of Rovio’s outstanding shares and options at 9.25 euros per share and 1.48 euros per option in a friendly takeover.

Sega CEO Haruki Satomi said: “Among the rapidly growing global gaming market, the mobile gaming market has especially high potential, and it has been SEGA’s long-term goal to accelerate its expansion in this field.”

Alexandre Pelletier-Normand, CEO of Rovio, said: “I grew up playing Sonic the Hedgehog, captivated by its state-of-the-art design. Later, when I played Angry Birds for the first time, I knew that gaming had evolved into a true mainstream phenomenon, with the power to shape modern culture.

“Combining the strengths of Rovio and SEGA presents an incredibly exciting future.”

The Finnish gaming business behind Angry Birds has agreed a takeover by Japan’s Sega Sammy (Alamy/PA)

The Finnish gaming business behind Angry Birds has agreed a takeover by Japan’s Sega Sammy (Alamy/PA)

AI firm says 2022 revenue was 40-50% lower than previously reported

07:53 , Daniel O’Boyle

AIM-listed Deepverge said its revenue for 2022 could be half as much as previously stated, having “incorrectly recognised” a number of contracts.

The company – which provides AI technology for the life sciences sector – said its actual revenue for 2022 would be 40-50% lower than the £17.2 million it had reported.

Most of the lost revenue will still be recognised in 2023, but some will not.

It added that it still expects to be able to stay in business, but that this would require its capital to be “tightly managed”. It is looking at new funding options to shore up its balance sheet.

Quiz UK sales climb 17%

07:49 , Simon Hunt

Sales at fashion brand Quiz climbed 17% to £92 million in the year to end March as customers flocked to its shops for the firm’s low-price dresses.

In-store sales jumped 23% while online sales grew more modestly at 12% over the year.

However, the firm wouldn’t offer any sales guidance for the forthcoming financial year, as it warned: “External headwinds may impact consumer demand across the Group’s sector over the coming months, reducing its visibility for FY24.”

FTSE 100 run to continue as conditions improve

07:44 , Graeme Evans

The FTSE 100 index posted its fourth successive weekly gain on Friday as global stock markets continue to shrug off the banking turmoil that brought volatile conditions only a month ago.

In the US, the Dow Jones Industrial Average is on a similar run to London’s as Wall Street sentiment benefits from signs that inflation is cooling.

Deutsche Bank noted today that the VIX index of volatility is at 17.07, its lowest level since the S&P 500 index hit its record intraday high in January 2022.

Earnings updates from the likes of Netflix and Tesla will test confidence later in the week, while Wednesday sees the latest update on UK inflation. Economists expect a figure of around 9.8%, compared with the bigger-than-expected 10.4% the previous month.

In today’s trading, CMC Markets sees London’s top flight opening 20 points higher at 7892.

Page Group says UK jobs market “tough”

07:36 , Michael Hunter

Page Group, the FTSE 250 recruitment consultant, has described the UK market as “tough”, alongside similar conditions in Asia and the US.

The company said confidence among recruiters and candidates fell, creating delays in filling job vacancies, with recruitment for temporary positions outran permanent placements.

Nicholas Kirk, chief executive officer, said: “The challenging conditions we saw towards the end of 2022 continued into 2023, with lower levels of both candidate and client confidence resulting in delays in decision making and candidates being more reluctant to accept offers.”

He added: “tough market conditions continued in Asia, the US and the UK.”

But Germany led markets in Europe, the Middle East and Africa to “a record performance”.

Overall group gross profit slipped 2.4% in the first quarter to £263 million. The drop was led by a 15% fall in the US, with the UK down 9.4%. Germany rose 11% and France 3%.

Network International “minded to accept” £2 billion private equity takeover bid

07:31 , Daniel O’Boyle

The board of Middle East-facing payments company Network International said it was likely to accept a £2 billion takeover offer from private equity group CVC, should a firm bid be made.

Network International revealed that CVC had made a proposal about a possible bid last week, after a number of previous approaches were rejected.

However, it said the latest bid of 387p per share was “at a value that the board would be minded to recommend to Network shareholders”.

With John Wood Group also revealing it would open talks with Apollo Global today, two different FTSE 250 companies announced that they were looking at deals to be snapped up by private equity firms.

Qinetiq upbeat after “impressive” quarter

07:24 , Graeme Evans

Defence technology firm Qinetiq today forecast annual results ahead of its previous guidance and at the upper range of market consensus expectations.

The Hampshire-based company described fourth quarter trading as “impressive”, leaving order intake for the year to 31 March up by 40% at a record high of more than £1.7 billion.

Recent contract wins in the UK have included a £259 million 10-year renewal of the Maritime Strategic Capability Agreement with the Submarine Delivery Agency and an £80 million 10-year mission data contract with the MoD.

Chief executive Steve Wadey said: “Our distinctive offerings remain in high demand, demonstrating we are well placed to respond to our customers’ long-term needs driven by world events and the importance of a technologically advanced defence industry to the national security interests of our threehome countries.”

John Wood board opens talks with Apollo over £1.7 billion acquisition

07:20 , Daniel O’Boyle

The board of engineer John Wood Group has opened talks with private equity group Apollo Global, aiming to sell the group for £1.7 billion.

Apollo had made four non-binding proposals about a takeover before submitting what it said was its final offer earlier this month.

Though the Wood board had rejected all the previous approaches, it said that after speaking to shareholders it would begin official talks, hoping to receive a binding offer on the same terms as the final proposal.

“Apollo has stated to the board that it values the skills and capabilities of Wood’s employees and believes the company is well positioned in its markets and at the forefront of the energy transition and industrial decarbonisation,” the Wood board said.

Martin Sorrell to remain S4C exec chair after tumour operation

07:19 , Simon Hunt

The boss of S4 Capital said he will remain in post following an operation to remove a tumour.

78-year-old Martin Sorrell underwent keyhole surgery in February and is set to receive continued preventative treatment over the coming months.

He said: “My doctors have advised me that during this treatment, I should be able to work as normal most of the time, fully engaging with the Company and our excellent Executive team, although I have also decided to reduce my travel schedule for a few weeks. Otherwise, business as usual.”

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