The Week UK - 29.02.2020

52 CITY

THE WEEK 29 February 2020

Commentators

“By allaccounts, 2019 wasaterrific yearfor the stock market,”

saysMikeHofman.Yetoddly,themarketfor privatecompanies

goingpublic proved “punishing”.Lastyear, 159 companies listed

in theUS,raising$33bn,accordingtoPitchBook.Butthat’s

downnearly30%on 2018. Doubtlessenthusiasmwas dampened

bysome“headline-grabbingmisfires”:notably,WeWork’s

“yankedIPO”and thepoorperformanceof“once-celebrated

unicorns” (such asUberand Lyft)whodid makeit tomarket.

But somethingelseseems tobehappening.Agrowingchorus

of entrepreneursand venturecapitalists wantsto knockthe IPO

chessboardon thefloor,“scatter thepieces and start afresh”.

They’relookingto popularisethe “direct listing”–analternative

avenuein whichcompanies sell existingsharesratherthanissuing

new ones,cuttingWallStreetoutof the equation altogether.Some

say directlistingsare“less rigorous”thanIPOs,and so“ripefor

abuse”.Anupcoming lawsuitinvolving Slack will test thatnotion.

Butwecouldbewitnessing the end oftheIPOas we know it.

Thereareplentyofplaceswhereinvestorshavefearedfar-left

socialistgovernments,saysMatthewLynn.ButtheUnitedStates?

Thehomeoffreeenterprisehasneverevenhadamainstream

socialdemocraticparty,andwassurelyoneplace“nobodyhadto

worryabout”.Notanymore.TheveteransocialistBernieSanders

isnowtheclearleaderfortheDemocraticnominationinthis

year’spresidentialelection,andmarketsaregoingtohavetostart

workingoutthe“potentialconsequences”.Sandershasargued

for wealthtaxes,curbsonWallStreet, workers’representation

on companyboards andmassive programmes“thatcouldalmost

doublegovernment spending”. Hisradical policies would have

ahugeimpacton the globaleconomy–wemightexpect“the

dollarto bedethroned”, equitymarketsto tumble, and “a

massiveexodusfromWallStreet” forstarters.Justweeks ago,

Sanders’snominationseemed “unimaginable”. Butanycountry

thatcanelect someoneas“extreme”asTrumpcouldcertainly

electSanderstoo–particularlyiftheeconomyisheadingdown-

wards.Comethesummer,investorsmaybe fearingtheworst.

PresidentTrumphasbeeninIndia,heapingpraiseonitsleader,

NarendraModi.Butthecountryis“facingtwineconomicand

politicalcrises”,saysMartinWolf.Politicshastakenan“aggress-

ivelyilliberal”turn,intheteethofa“dramatic”slowdownin

growthsincethe 2008 financialcrisis.Peerbeneaththeofficial

statistics,andannualgrowthhasaveraged 4 .5%accordingto

credibleestimates–verypoorbyrecentIndianstandards.“A

viciousspiralisatwork”:highinterestratesandlowprofitability

are“worseningdebtburdensandsoaggravatingtheproblems”

formanyfirms.Yetthegovernment’sresponse“seemstobeto

denytheevidenceofaslowdown”.Byallaccounts,“thebest

advisershavemostlygone”,leavingpolicy-makingconcentrated

withinModi’soffice.It’sessentialforIndia’sfuturethatgrowth

risesabove7%.That’sahugechallengerequiringmanyreforms,

reliabledataandopendebate.Aneasieralternativetothetough

businessofrevitalisingtheeconomyisrelianceonbelligerent

Hindu“identitypolitics”.“Thatseemstobethecurrentchoice.”

“Espionage andbusinesshavelongbeen entangled,” says

Schumpeter. The history ofspying is litteredwith casesof front

companies beingusedfor“covertskulduggery”. But few areas

“remarkable” as thatofCrypto AG–the Swisscompany that

oncedominatedthe global market forciphermachines.The firm,

it turns out, wasownedby the CIAfor decades, meaning the US

could listenin on foreign governments’secret communications.A

leaked CIA reportcalled it “the intelligencecoupofthe century”.

Today,“theprivatesector is moreimportant tospooks than

ever”: techgiants hold more personal data than thestate, and

governmentswant access to it. In these days ofbiometric border

controls,spies are placedinrealfirms so theycan travel under

their ownnameswith cover. “Yet cloak-and-dagger arrangements

cango badlywrong.” Companiesthatcollaboratewith spiesput

employees at risk. Andthe British engineering firmFerrantiwent

bankruptafterbuying ISC–aUS arms contractor“that turned

out tobe aCIA frontfor rampantgun-running”.Thespooks’

gratitudewas“scant consolationfor aggrievedshareholders”.

TheBarclayfamily

“WeallrememberTolstoy

saying‘eachunhappyfamily

isunhappyinitsownway’,”

notedDesmondBrowneQC

intheHighCourtthisweek.

Butwhowouldhave

guessedthatthefamilies

oftheBarclaytwins–retail

billionaireswhoseempire

alsoincorporatesthe

Telegraphnewspapergroup

andTheRitzHotel–would

falloutsospectacularly?Ina

squabbleoverfamilyassets,

SirFrederickBarclay, 85

(pictured),andhisdaughter

Amandaaresuingthethree

sons(Alistair,Aidanand

Howard)andthegrandson

ofhistwinbrother,SirDavid,

forbuggingtheconservatory

ofTheRitzover“several

months”torecordtheir

privateconversations,said

theFT.Thematteronlycame

tolightrecentlywhenAlistair

Barclaywasfilmedlateat

night“handlingthebug”in

theconservatory,towhich

SirFrederickwaswontto

repair“tosmokeacigar”.

TheBarclaysboasta

combinedwealthof£8bn,

accordingtoTheSunday

Times:theyowntheVery

andLittlewoodswebsites

andthedeliveryfirmYodel.

The day-to-day running of

the empire has long been

handled by Sir David’s sons,

Aidan and Howard, said The

Guardian. But now, amid

mounting losses, the family

silver is up for sale, and as

the court was told this week,

“cousin, sadly, has been

pitched against cousin”.

The divisions apparently

emerged last year when The

Telegraph was put up for

sale. Still, it’sacoupofsorts,

said Alistair Osborne in The

Times. Who’d have thought,

alongside all their other

achievements, the Barclays

would produceatwis ton

theboard gameCluedo?The

culprit, this time, was “in the

conservatory with the bug”.

India is in

the grip of

two crises

MartinWolf

FinancialTimes

Don’t rule

out the threat

from Bernie

MatthewLynn

TheDailyTelegraph

The end of

the IPO as

we know it?

Mike Hofman

Marker.Medium.com

Uncovering

the business

of spying

Schumpeter

The Economist

City profile