The drought in London capital markets that saw companies pull IPO plans or migrate listings elsewhere is nowhere near an end. Numis, the biggest UK corporate broker by number of clients, expects the “difficult” conditions to persist throughout the year. That may weigh on revenue despite a recent uptick in M&A deals.
(Bloomberg) — The drought in London capital markets that saw companies pull IPO plans or migrate listings elsewhere is nowhere near an end. Numis, the biggest UK corporate broker by number of clients, expects the “difficult” conditions to persist throughout the year. That may weigh on revenue despite a recent uptick in M&A deals.
Here’s the key business news from London this morning:
In The City
Legal & General Group Plc: The pensions and insurance firm remains on track to achieve 2020-2024 goals even as it transitions to IFRS 17 accounting standards.
- The company still expects to generate between £8 billion and £9 billion of capital, while growing the dividend at 5% per annum to full-year of 2024
Numis Corporation Plc : The investment bank’s total revenue in the third quarter was below the first half run-rate amid the deteriorating market backdrop across the investment banking industry.
- “Macro-economic concerns have resulted in a prolonged period of exceptionally low deal volumes across the market and the effective closure of the IPO market,” the broker said, adding “difficult” conditions are likely to persist throughout the end of the year
Redde Northgate Plc: The commercial vehicles rental services provider reported an almost 20% rise in revenue in fiscal 2023 driven by strong demand and major contracts.
- Sees vehicles supply improving but still below high levels of customer demand, with the group’s fleet exceeding 130,000 units and multi-year insurer contracts at full run-rate
AO World Plc: The online retailer is confident it can return to top line growth in the medium-term, as it moves ahead with its plan to remove non-core channels and loss-making sales.
- The Bolton-based company said it’s also on track to deliver a 5% Ebitda goal in the short term
In Westminster
Water regulator Ofwat was too lax in letting privatized utilities take on so much debt in the mid-2000s, CEO David Black told a House of Lords committee on Tuesday, as he warned that Thames Water will need more than £1 billion to turn itself around. “We should have stepped in at that point to stop companies gearing up,” he said. The UK’s largest water supplier has held talks with government officials who have considered nationalizing the utility amid concerns over the rising cost of its debts of more than £13 billion.
Politicians should prioritize share ownership alongside home ownership to recreate the 1980s-style boom that occurred under Margaret Thatcher, according to a report by the Centre for Policy Studies. The influential Conservative think tank co-founded by the former UK PM called for a proportion of new equity in every IPO to be allocated to the general public to unlock £1.8 trillion of savings. High regulatory hurdles to investing and an “overly cautious attitude” to risk are putting millions of Britons off buying shares, it said, while noting growing concern over companies shifting their stock listings to the US from London.
In Case You Missed It
The Bank of England is considering plans to force more international banks to set up UK subsidiaries as part of a wider review on the Silicon Valley Bank collapse earlier this year, the Financial Times reported Wednesday, citing unidentified people familiar with the matter. The current guidance suggests banks with £100 million retail and small transactional deposits or more than 5,000 customers to establish a subsidiary.
The Financial Conduct Authority has proposed setting up a single UK price feed for bond trades before one for equities. The UK watchdog is planning to run a competitive tender process to appoint one provider of the technology for fixed income, with a tape for equities following later, according to a statement. The technology will collate the price, size and timing of trades across multiple trading venues in the country to produce a centralized, near real-time feed.
HSBC Holdings Plc will become the first British bank to test an advanced data-security system being run by UK telecom giant BT Group Plc, Amazon.com Inc.’s AWS cloud and Japan’s Toshiba Corp. So-called quantum key distribution is a type of cyber defense that financial institutions think could help protect trillions of dollars of transactions from increasingly sophisticated hackers in the future. “As technology develops and current methods begin to be defeated, we have to make sure we have the most up-to-date robust encryption and security standards,” HSBC’s Europe head, Colin Bell, said in an interview.
And finally, recruitment firm Impellam Group Plc confirmed talks with HeadFirst Global on a possible offer for its entire share capital.
Looking Ahead
Currys Plc discloses its full-year results on Thursday morning, with analysts expecting a drop in the company’s revenue to around £9.4 billion, according to a consensus compiled by Bloomberg. That compares with £10.14 billion reported in fiscal 2022.
Also watch out for quarterly trading updates from recruitment firm Robert Walters Plc, Workspace Group Plc and Victrex Plc, among others.
For a more considered take on the UK’s economic and financial news, sign up to Money Distilled with John Stepek.
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