The Sunday Times - UK (2021-12-19)

Just three partners at Robey

Warshaw, the boutique

investment firm that hired

former chancellor George

Osborne this year, shared

£30 million of profits in the

first year of the pandemic.

Set up in 2013 by Sir Simon

Robey, 61, a former Morgan

Stanley banker, and Simon

Warshaw, 56, a former UBS

banker, the partnership is

regarded as one of the leaders

in providing advice on

mergers and acquisitions

(M&A) to big companies.

Its accounts, filed at

Companies House, show that

in the year to the March 2021,

turnover rose to £40 million

from £26.6 million the year

before. The firm generated

£30 million of profits for

distribution among the three

members of the partnership;

profits for the previous year

were £17.9 million.

The other member of the

partnership is chief operating

officer Philip Apostolides, 53.

Osborne, 50, will not take a

share of the profits as he

formally joined in April 2021,

after the financial year-end.

According to the accounts,

one of the partners, thought

to be Robey, received the

“largest entitlement to

profit”— about £20 million.

That is double the £10 million

he is said to have received the

previous year.

The accounts do not reflect

the M&A boom that has

gripped the City since the

depths of the pandemic,

when Robey Warshaw

advised on the £7.2 billion

takeover of insurer RSA. The

firm is also said to be working

for a number of companies in

preparation for potential

bids, including telecoms giant

BT, supermarket Sainsbury’s

and fund manager Jupiter.

The latest figures show that

business bounced back from

the previous year when there

was a dearth of takeovers,

resulting in the lowest

earnings at the firm since its

creation. Despite the

improvement, profits are still

below the £48.4 million

reported for the year to the

end of March 2019, when

Robey is thought to have

taken a £27.8 million share.

The turnover recorded in

the latest accounts is likely to

have been generated from

advice given by Robey

Warshaw to the London Stock

Exchange Group on its

£20 billion takeover of data

firm Refinitiv, and from

advice on the sale of

Centrica’s US business. The

Jill Treanor, Jim Armitage

Supermarkets have begun stockpiling

groceries in anticipation of a fresh lock-

down as the highly contagious Omicron

variant of Covid-19 spreads rapidly across

the country.

Britain’s largest food retailers are

scrambling to avoid a repeat of chaotic

scenes from March last year, when they

were left unprepared for a wave of panic

buying that saw shelves being stripped of

everything from dried pasta to baked

beans and flour.

“We are budgeting for a lockdown.

We’ve been ramping up orders on the

2,000 most commonly bought lines...

everything that people tend to buy when

they go into that slightly bizarre survival

mode,” said a senior source at one of the

big four supermarkets.

The boss of another major food

retailer said that his company was aiming

to hold two weeks’ worth of additional

stock than would normally be the case

heading into the new year.

“The NHS will be overwhelmed if the

government doesn’t lock down... the

numbers speak for themselves. We are

expecting a lockdown to come in January

and we don’t want to get caught out with

empty shelves again,” he said.

The rapid spread of Omicron has

pushed Covid cases to record highs and

stoked fears that the health service could

be deluged with patients after house-

holds mix over the Christmas break. The

Times reported yesterday that govern-

ment officials were drafting plans for a

two-week “circuit breaker” lockdown

after the holidays, adding that no deci-

sions had yet been taken.

Supermarkets, which are already said

to be enjoying bumper Christmas trad-

overvalued. The firm also

highlighted concerns around

THG’s corporate governance

and noted that its cashflows

were deteriorating.

THG’s shares have since

slumped 63 per cent to 190p.

Attempts by THG founder

and chief executive Matt

Moulding to restore investor

confidence in Ingenuity —

which had underpinned the

group’s valuation — backfired

dramatically, prompting the

stock to fall even further.

The collapse in THG’s

shares has raised doubts over

whether Japanese investment

giant SoftBank will exercise

its option to buy a 19.9 per

cent stake in Ingenuity for

$1.6 billion (£1.2 billion). As a

whole, THG is currently

worth £2.3 billion.

merger of O2 and Three was

blocked by EU regulators on

competition grounds, but

many in the industry feel that

such consolidation is vital to

cut costs and free up funds

for investment.

Virgin Media O2 chief

executive Lutz Schüler said:

“There’s a danger that a gap

emerges between the 5G

future the country needs and

the investment required to

achieve it.”

Interview, page 9

Takeover bonanza sees banker trio share £30m

firm, which employs just 13

staff, also advised National

Grid during the period.

Robey Warshaw is based in

Mayfair, though the accounts

show that it implemented

working from home during

the depths of the pandemic.

In the past, it has advised on

some of the most high-profile

deals in the City, including

Comcast’s takeover of Sky,

Anheuser-Busch InBev’s

acquisition of SABMiller, BG’s

sale to Shell and Cadbury’s

takeover by Kraft.

Grocers

stockpile as

lockdown

fears grow

ing, are bracing themselves for a period

of surging demand at a time of potentially

widespread staff absences in January,

echoing the summer pingdemic that

forced thousands of workers to isolate.

“There will be a large build-up of stock

this year because supermarkets will be

expecting people to stay at home. Cus-

tomers are likely to be living and working

at home in January, so they will be filling

up their larders and fridges,” said Ian

Wright, chief executive of the Food &

Drink Federation.

Last week, the Department for Envi-

ronment, Food and Rural Affairs is

understood to have shared data with rep-

resentatives from food industry trade

bodies indicating that widespread infec-

tions would cause significant disruptions

to operations in the supply chain during

the first couple of weeks of January. One

source on the call said that because the

spread of Omicron was so rapid, they did

not expect the current wave to last as long

as previous ones.

While supermarket bosses do not

expect a repeat of the frenzied buying of

last March, when sales spiked by 50 per

cent, they are now facing additional com-

plications in the supply chain caused by

shortages of HGV drivers and backlogs at

Britain’s ports.

In November, Asda revealed it had

chartered its own cargo ship to ensure

that toys and Christmas decorations

would arrive in its stores. Tesco is now

importing fresh food from Europe via

refrigerated rail services to help circum-

vent HGV driver shortages.

CINEWORLD IN SHORT-SELLING WEB

Short sellers have lined up

more bets against the heavily

indebted cinema chain

Cineworld than at any time

since the height of the

pandemic ten months ago,

amid concern at the huge

damages it has been ordered

to pay to Canadian rival

Cineplex, write Sam

Chambers and Jim Armitage.

Nearly 16 per cent of

Cineworld’s shares are on loan

to short sellers, according to

IHS Markit. Traders have

continued to place bets

against the company even

after its shares plummeted

39 per cent last Wednesday,

when a Canadian court

ordered Cineworld to pay

£722 million in damages to

Cineplex for aborting a

takeover last year.

Cineworld plans to appeal

the verdict but legal sources

suggested it would be difficult

to overturn. Pandemic-related

contract clauses are typically

watertight in Canada, which

suffered during the Sars

epidemic two decades ago.

If an appeal is unsuccessful,

it may be forced to sell or list

its US business, which made

up around three quarters of its

sales prior to the Covid crisis.

Cineworld has been

battered by the pandemic and

Omicron threatens further

disruption just as blockbuster

releases such as Spiderman:

No Way Home should be

boosting sales. Lenders to the

company, which which has

net borrowings of $4.6 billion

(£3.5 billion), called in

advisers from FTI Consulting

to handle negotiations with

Cineworld last year, according

to Sky News.

Panic buying last

year stripped

many items from

the big four

supermarkets

Fast-fashion firm

Missguided back

from the brink

Boohoo shares crashed to a

five-year low after the

company warned investors

that sales growth would slow.

The spectacular ascent of

the secretive Chinese

operator Shein, which sells

into the UK, has also cast a

cloud over the fast-fashion

industry. It is winning market

share from the likes of

Boohoo and Missguided with

rock-bottom prices and

sophisticated use of social

media. Analysts from Morgan

Stanley say the company’s

sales could reach $20 billion

(£15 billion) next year.

Missguided’s sales were

about £290 million in the

year to March. In its last set of

accounts, to March 2020, it

reported underlying profit of

£2.1 million.

Alteri bought furniture

stores Harveys and Bensons

for Beds in 2019, before

restructuring them through a

pre-pack administration six

months later after the

pandemic took hold.

Sam Chambers

THG attacker calls a

truce after shares fall

The City researcher that

helped precipitate a

spectacular slump in the

shares of The Hut Group has

indicated the worst is now

over for the troubled online

retailer, writes Sam Chambers.

Research firm The Analyst

has withdrawn its short

recommendation on THG, in

effect declaring that the share

price has no further to fall.

The firm told its clients it was

difficult to see further

downside and that THG’s core

beauty and nutrition

businesses appeared sound.

In October, The Analyst

recommended that clients

open short positions — a bet

against the share price — in

the group on the basis that its

Ingenuity ecommerce

platform was grossly

Government urged to

permit mobile mergers

Virgin Media O2 has called on

the government to allow

more mergers among mobile

phone operators to enable

them to make savings and

invest billions of pounds in

the UK’s networks, writes

Jim Armitage.

The company made the

call in its submission to the

government’s wireless

infrastructure strategy, which

will set the industry ground

rules for years to come as

companies invest billions in

rolling out 5G technology. A

Fast-fashion retailer

Missguided is poised to

secure a rescue deal after the

supply chain crisis plunged it

into financial difficulty.

Missguided, led by founder

Nitin Passi, is understood to

have agreed terms on a deal

with the turnaround firm

Alteri, which will give it a cash

injection and a loan.

Alteri, which is backed by

American private equity giant

Apollo, specialises in buying

distressed retailers. It is

expected to appoint directors

to Missguided’s board and

take a hands-on role in the

company’s turnaround. A

deal could be announced as

soon as this week.

Soaring freight costs have

eaten into the thin margins of

fast-fashion retailers and

delays at ports have made it

difficult for them to get hold

of clothes in the tight

timeframes to which they are

accustomed. Last week,

Supermarkets take steps

to avoid empty shelves

as Omicron surges,

writes Sam Chambers

SONY PICTURES/THE HOLLYWOOD ARCHIVE/ AVALON

Lord Paul in hunt to buy UK manufacturer

Veteran industrialist Lord

(Swraj) Paul is planning a

return to UK manufacturing

at the age of 90.

The Indian-born billionaire

said he was looking to buy a

“substantial” manufacturing

operation in the UK and

intended to spend several

hundred million pounds on

the right company.

Paul founded his first

business here in 1968,

borrowing £5,000 to launch

Huntingdon-based Natural

Gas Tubes. However, almost

all his operations are now in

the US, Canada, India or the

United Arab Emirates.

“Britain has been my home

for more than 50 years and I

really miss not having a

factory here,” the peer said.

Paul said he hoped to

complete the acquisition in

the coming months. “At my

stage of life, you have to do

what you want — and do it

quickly, just in case,” he

added.

Paul’s industrial group

Caparo typically generates

annual profits of more than

£250 million a year, largely

from making tubes, pipes and

other components for the

automotive industry and

other sectors. It had

substantial operations in the

UK until six years ago, when

the group’s West Midlands-

based operations fell into

administration. At the time,

Britain’s steel industry was

facing heavy pressure from

cheap Chinese imports, steep

energy prices, weak demand

and a strong pound.

Although Paul intends to

Robert Watts pour some of his estimated

£2 billion fortune into the

project, the purchase will be

largely funded by borrowing.

He is considering sites within

150 miles of his London base.

The peer does not intend

to manage the UK acquisition

on a day-to-day basis,

preferring either to work with

existing management or

bring in his own team.

Paul came to the UK in

1966 seeking treatment for

his daughter Ambika, who

died of leukaemia two years

later at the age of four.

Drax seeks to build biomass plants abroad

Power giant Drax is planning

to build its first overseas

biomass plants as part of a

£3 billion expansion drive.

The company is scouting

locations for biomass-

powered generation plants in

North America that would

use carbon capture and

storage (CCS) technology to

remove and dispose of the

CO 2 emitted through burning

its wood pellet feedstock.

It would be the boldest

move yet for the company

since it transformed the vast

Drax power station in north

Yorkshire from burning coal

to feeding off wood pellets. It

is now planning to install CCS

on the site by 2027.

Chief executive Will

Gardiner said he had a team

looking at sites in Louisiana,

the Pacific Northwest and

western Canada, where wood

is plentiful. Ideally CCS

infrastructure, such as pipes

to take the CO 2 to storage sites

underground, would already

exist in these locations.

Carbon capture is already

used in parts of North

America such as Louisiana,

home of the biggest CCS

project at the Petra Nova

coal-fired power station.

Drax is criticised by some

environmentalists because its

wood pellets still emit CO 2

when burned, just as coal

does. Drax argues that the

carbon they emit is replaced

as it plants new trees.

If that carbon was captured

and stored, it claims that the

energy it creates would have

“negative” carbon emissions

— removing a net amount of

Jim Armitage carbon from the atmosphere.

Gardiner said: “The

Intergovernmental Panel on

Climate Change says we have

to remove 10 billion tonnes of

CO 2 a year in 2050. The likes

of Microsoft say they would

pay $100 (£75) a tonne for CO 2

removal. That could be worth

$1 trillion.”

Drax is also seeking to

expand the amount of wood

fibre pellets it sells to other

biomass energy companies

around the world, with Japan

being a target market,

Gardiner added.

December 19, 2021 · thesundaytimes.co.uk/business thesundaytimes.co.uk/money

BUSINESS

&MONEY

GIVING AWAY

A FORTUNE

MONEY,

PAGE 14

IS ELLIOTT

LOSING ITS

BITE?

PAGE 7

BRITISH

GAS ON

THE UP

PAGE 10

THE APP WITH A

HOTLINE TO GOD

PAGE 8