The Week - UK (2021-02-06)

CITY 45

6February 20 21 THE WEEK

Globalmarketswereroiledbytheclash

betweendaytradersandhedgefunds

overheavilyshortedUSvideogame

retailerGameStop,whosesharesleapt

400%inaweekasbuyerspiledin(see

p46),galvanisedbyReddit’sinvestment

community,WallStreetBets.Theensuing

“shortsqueeze”onhedgefundsbetting

againstthestocktookabigtoll:one

fund,Melvin,sustaineda53%loss.

TradingplatformsRobinhoodand

InteractivestoppedtradinginGameStop

andotherhotlyfollowedstocks.Butas

attentionswitchedtothesilvermarket–

promptingthebiggestdailyriseinthe

metal’spriceineightyears–fearsof

systemicdamagefromextrememarket

speculationgrew.InanothersignofWall

Street’s frothy markets,Goldman Sachs

reported that so-called “Spacs” (special

purpose acquisition companies) raised

$16bn in the first three weeks of 2021 –

compared to $13bn in the whole of 2019.

The oil pricehit a12-month high and

kept rising, with Brent Crude above $58/

barrel.Moonpig,the e-greetings card

company, floated in London at 350p;

shares ended the day at 410p, valuing

the company at £1.4bn.GlaxoSmithKline

announced as150m collaboration with

Nasdaq-listedCureVacto developanew

generation of vaccines targeted at Covid

variants. Ex-chancellor George Osborne

tookanew job asabanker –inanM&A

role with boutique firmRobey Warshaw.

Centrica‘s boss, Chris O’Shea, reported

his family had been posted excrement

followingapay rowatthe firm.

BP/Exxon/Chevron:oilspoiler

Afterwhatitdescribedasa“brutal”year,BPplunged£13.2bnintotheredin 20 20,

markingits“firstfull-yearlossinadecade”,saidSimonFoyinTheDailyTelegraph.The

FTSE 100 oilgiantwashitbadlybyplungingdemandandpricesduringthepandemic,

thoughCEOBernardLooneysaidheexpected“betterdaysahead”in2021.Looneyhas

pinnedhiscolourstoBP’snew“netzeroambition”,anditsstrategyofbecoming“an

integratedenergycompany”,buthefaces“scepticismfrominvestors”.AtleastBPisn’t

aloneinitstravails,saidDerekBrowerandJustinJacobsintheFT.America’sbiggestoil

producer,ExxonMobil,alsoregistereditsfirstannualloss,citing“themostchallenging

marketconditions”ithadeverexperienced.Thesituationseemedsodireinearly 2020

thatthecompanyevendiscussedadefensivemergerwithChevron,tocreateanall-

Americanchampion.Hadthatgoneahead,itwouldhavebeen“thebiggestmergerof

alltime”,creatingabehemothsecondonlyinsizetothe$1.78trnSaudiAramco,said

MikeSpectoronReuters.Couldityethappen?AmightyUSoilcombomightsucceedin

neuteringAramco,whichhaspreviously“pushedmanyUSdrillerstothefinancialbrink

byfloodingthemarketwithoil”.ButgiventheDemocrats’historiclackofsympathyfor

suchdeals,“thewindowmightbeallbutclosed”underthenewBidenadministration.

Foresight Group:theFinkdoctrine

Therenewables-focusedventurecapitalistForesightGroupispreparingtolaunch“the

nextbig greenIPO”in London,saidTomBraithwaitein theFT. Whatan“exquisite

time”togopublic–justasenvironmental,socialand governance(ESG) preoccupations

reach“newlevelsofhype”.Lastweek,LarryFink –headofBlackRock,theworld’s

largestassetmanager–reiteratedhiscall for higher standards,observingthat “climate

transition presentsahistoric investment opportunity”.Foresight, whoseassetsunder

managementhave surgedto£6.8bnsinceitembraced “ESG-oriented strategies”,can

countonsupport fromawaveofinvestors“desperatetofollowtheFink doctrine”when

it listslater thismonth. Thegroup’sexpectedvaluationis£500m–a“heftypremiumto

revenuesofonly£57.3m,andnetprofits of£6.5m”.There arealsoquestionsaboutthe

“social”credentialsof afinancialgroupregisteredoffshore inGuernsey.Foresightillus-

trates thecurrent“yawningchasm”on the stockmarket.Anythingwitha“greengloss”

ishighlyprized; bycontrast,“reliable cashcows” arespurned as“dirtydead-enders”.

Marston’s: independenceday

Shares inthe pubchainMarston’sweretradingat almost 130p in 2 019 beforethe

pandemichit,saidMarkSweneyin The Guardian.Theensuingslumphasnowmade

it a“takeovertarget”–perhapsthefirstof manytocomein “the embattledhospitality

sector”.Marston’s,whose 1 ,400outletsincludethePitcher&Pianochain, lastweek

received anoffer of105pasharefromthe USprivateequity group Platinum.“Raisea

glass” tothe directors,said AlistairOsbornein TheTimes:“unlike toomanyrollover

boards”, theyturnedit down–claimingthe£690m bid “very significantly undervalues”

the business, which recently merged withCarlsberg’sUKarm,and assumedresponsibility

forrunning156 pubs attachedtothe family-owned WelshbrewerSABrain.“Platinum’s

portfolioincludesaproviderofportabletoilets.Bog off seemsdoubly appropriate.”

Arcadia/Asos/Boohoo: carving up aretailempire

So farewell, Sir Philip “Effing” Green, said

Alistair Osborne in The Times. The erstwhile

king of the high street has been “trying to get

shot of Arcadia for years”. Now, helped by

Covid, he has achieved it–selling the group’s

Topshop, Topman and Miss Selfridge brands

to Asos for£330m, andreportedlyoffloading

Burton, DorothyPerkins and Wallis to Boohoo

for £25m. “Administrator Deloitte has done its

job in getting the highest price” from the online

retailers–but at thecost of almost 13,000 jobs

and 444 shops. Anda“day of reckoning” still

looms overagiant hole in the pension fund.

“Barringamirac le”, Arcadia’s 9,500 pensioners

are heading for the Government’s pensions

lifeboat: “a bit ofacontrast toaGreen yacht”.

Along-standing tech sceptic, Green assumedaCanute-like

position as the internet upstarts advanced, said Laura Onita in

The Sunday Telegraph. Until two years ago, Asos was banned

from selling Topshop clothes on its site. The

online firm, now worth £4.7bn, has since

become Topshop’s biggest online partner; this

deal will secure more of the profits. It also

raises the stakes in the “platform wars” now

shaping UK fashion, as the dominant players

–Next, Asos and Boohoo–rush to aggregate

brands. Even M&S has “cottoned on”,

snatching the once-elegant Jaeger from the

ruins of Edinburgh Woollen Mill Group.

The revolution has meant “carnage” on the

physical high street as “jobs and business rate

revenues vanish”, said The Sunday Times. But

Green’s own negative contribution shouldn’t

be overlooked, said Alex Brummer in the Daily

Mail. Ultimately, he was more interested in

living the high life than running his empire. This “self-righteous

retail showman for whom apology isaforeign language” has

left behind hima“tra il of destruction”.

Green:a“retail showman”

Seven days in the

Square Mile

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