Supreme Court ruling against Surrey council threatens new fossil fuel projects

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Swiss central bank cuts interest rates for the second time this year

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EU imposes sanctions on Russian LNG

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Hargreaves Shares Bounce as Private Equity Firms Thrash Out Deal

Shares in FTSE 100 broker and fund supermarket Hargreaves Lansdown (HL) have bounced on news its board will accept a takeover bid from a group of private equity firms.

Yesterday, Hargreaves said US private equity giant CVC Capital, Denmark’s Nordic Capital, and a branch of the Abu Dhabi Investment Authority had made a consortium cash offer of £11.40 per share, valuing the Bristol business at £5.4 billion.

Over the last five days, Hargreaves’ share price is up 5.55% to £11.57, a sign investors are responding positively to the private equity interest.

The latest bid is the fourth such offer submitted to the investment firm. It had previously rejected three approaches on valuation grounds.

The companies now have until 1700 on July 19 to close their deal.

What Will Happen to Hargreaves if it is Sold?

If Hargreaves Lansdown is sold to a private equity business, or businesses, it will become the latest FTSE 100 firm to de-list from the index in favour of private ownership.

As a result, its shares will no longer be available to the public for purchase and trading.

If that occurs, the story would not just illustrate private equity interest in UK PLC, but also underline the malaise gripping the UK’s capital markets, which have struggled to display the compelling valuations on offer in the US and certain emerging markets.

Fund managers, investors, and businesses alike have complained about UK company valuations. This has led some firms to relist in more favourable markets, or simply to ignore the UK as a flotation location altogether.

In September last year, Cambridge-based chip designer Arm Holdings rejected London as a listing opportunity in favour of a place on the the Nasdaq. It shares have since prospered.

Betting firm Flutter also ditched its primary London listing in favour of New York, while the cyber security giant Darktrace, which floated in London 2021, accepted a US private equity bid in April this year.

Christian Kent, managing director of Houlihan Lokey, says the Hargreaves deal underscores the so-called “valuation disconnect” for wealth managers working with both public and private markets.

“With over 25 private equity-backed wealth management firms in the UK, this move isn’t surprising,” he told Morningstar.

“Over time, we expect to see further consolidation among these firms. With robust private equity backing, HL could emerge as a pivotal player in this consolidation through M&A activities.”

Kent now expects that, under private equity ownership,

Switzerland makes second interest rate cut as major economies diverge on monetary policy easing

The Swiss National Bank trimmed its key interest rate by 25 basis points to 1.25% in its second cut of the year. Two thirds of economists polled by Reuters had anticipated the SNB would decide in favor of a 25-basis-point-cut to 1.25%. The country’s inflation flatlined at 1.4% in May after a bump up in April and is expected to average the same level across full-year 2024, according to the SNB’s latest projections. A view of the headquarters of the Swiss National Bank (SNB), before a press conference in Zurich, Switzerland, March 21, 2024.  Denis Balibouse | Reuters

The Swiss National Bank on Thursday trimmed its key interest rate by 25 basis points to 1.25%, continuing cuts at a time when sentiment over monetary policy easing remains mixed among major economies.

Two thirds of economists polled by Reuters had anticipated the SNB would decide in favor of a 25-basis-point-cut to 1.25%.

The Swiss franc weakened in the wake of the announcement, with the Euro gaining 0.3% and the U.S. dollar up 0.5% against the Swiss currency at 8:55 a.m. London time.

Following the Thursday decision, the Swiss central bank pegged its conditional forecast for inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026. The figures assumes a SNB interest rate of 1.25% over the prediction period.

The country’s inflation flatlined at 1.4% in May after a bump up in April and is expected to average the same level across full-year 2024, according to the SNB’s latest projections.

The Swiss bank said it now anticipates economic growth of around 1% this year and around 1.5% in 2025, anticipating slight increases in unemployment and small declines in the utilization of production capacity.

“Over the medium term, economic activity should improve gradually, supported by somewhat stronger demand from abroad,” the SNB said.

In a June 14 note, analysts at Nomura had characterized a likely cut as a “finely balanced decision” and signaled that “underlying inflation momentum has remained weak which is likely to increase the SNB’s confidence that inflation will converge to the mid-point of its inflation target.”

Switzerland already has the second-lowest interest rate of the Group of Ten democracies by a wide margin, following Japan. It became the first major economy to cut interest rates back in late March and was earlier this month

CNBC

Permira’s Golden Goose postpones Milan IPO amid market volatility

Golden Goose Group, the Italian luxury sports brand owned by British private equity firm Permira, has postponed its much-anticipated Milan stock market listing just a day before the IPO was set to be priced, according to reports. 

Golden Goose announced on Tuesday that it was delaying the IPO due to a “significant deterioration in market conditions” following recent European parliament elections and the announcement of a general election in France. 

The FT’s sources revealed that Golden Goose’s decision was made after a day of intense deliberations. Although the company was confident in the launch price, there were concerns that investors might quickly sell off their shares once trading began. 

Golden Goose was set to price at €9.75 per share, near the lower end of its €9.50 to €10.50 range, aiming to raise approximately €600m, which would have valued the company at nearly €2bn.  

Just last week, Invesco committed to purchasing €100m worth of shares as a cornerstone investor. 

In an interview with Bloomberg, Mark Nelson, senior equity analyst at Killik & Co, said: “It didn’t feel like amazing timing. They are not an Hermes, they are not a Brunello Cucinelli — they are a different business in that they focus on trainers. I think it’s clearly had some weaker points to the best in class luxury brands.” 

Had it proceeded, Golden Goose’s listing would have been Milan’s largest since the €599m sale of gambling company Lottomatica last May. 

Permira previously faced challenges with its 2021 IPO of British boot brand Dr Martens in London, the shares of which have declined 78% since their market debut. 

Bank of America, JPMorgan Chase & Co, Mediobanca and UBS Group were advising on Golden Goose’s IPO. 

Investor confidence dips in June as global growth remains weak

Released today (20 June), the data from HL revealed that all geographic regions saw a reduction or hold in positive sentiment, other than towards Europe where the 1% rise in confidence can be explained by the European Central Bank’s decision to cut interest rates earlier this month (6 June). Core inflation figures ‘final nail in the coffin’ for hopes of June BoE rate cut UK figures returned a mixed picture as confidence in domestic economic growth increased marginally by 2.5% while assuredness that interest rates will rise decreased in the short term, according to Susannah Streeter, h…

JPMorgan European Discovery unveils two tender offers

The first tender offer will be for up to 15% of the issued share capital of the company, excluding shares held in Treasury. It will run on a tender price equal to a 2% discount to the prevailing net asset value per share as at the calculation date, and will exclude the costs of implementing the tender offer. NextEnergy Solar fund NAV drops 8.4% amid reduction in power price forecasts The trust currently holds £863.3m in total assets with a market cap of £656.3m, according to data from the Association of Investment Companies. The second proposal is for a performance-related tende…

Partner Insight: A maturing real estate market is gaining new investors

The real estate market is attracting a wider pool of investors and institutional investors are at the forefront of this. 

According to the 2022 Institutional Real Estate Allocations Monitor, allocations increased from 8.9% to 11.1% since 2013. An improvement in the quality of underlying real estate assets has helped stimulate this demand.

Real estate is heavily reliant on the lending market, and much has been done in the post Global Financial Crisis years to improve this environment. This has led to a lack of speculative supply, with poor quality projects finding it harder to find funding, and the value of other assets improving as a result.

A changing investor base

Attitudes among institutional investors have also changed, according to Invesco Real Estate’s European Investment Strategist Mike Bessell who says there is a greater understanding of real estate among investors now.

“The willingness of institutional investors to invest in these assets has been a real change,” explains Bessell. “This is one of the things that has driven [real estate] from being a smaller alternative sector to now featuring around 10% of institutional allocations in a typical portfolio.”

In a sense, there are two real estate markets – the occupational market and the capital market. The former is the income stream generated by the occupation of these assets, and the latter is how these income streams are priced relative to other investments.  

“We’ve seen those income streams relatively unaffected but the way they’re priced by capital markets has changed,” adds Bessell. “That’s the yield change that we’ve seen. We’re making sure we understand the relative winners from that in terms of those income streams, which in turn should then be better priced by the capital markets.”

New tools for the trade

Technological innovations have unlocked new analytical capabilities for the asset class. It is now possible to access a wealth of new data about these properties, and process this in a fraction of the time it would have traditionally taken.

This is progress given how real estate has lagged other asset classes in terms of digital accessibility, Bessell explains: “Fifteen years ago, real estate data was just a series of rents and yields. While I can find an obscure company, look at its historic financials and trade it, I cannot do the same for an individual building.

“Two buildings, sitting side-by-side and looking identical, will have completely different rent, risk and

Buyout firm Carlyle to build Mediterranean oil and gas group

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Private equity group Carlyle has announced plans to build an oil and gas company focused on the Mediterranean after agreeing to buy a portfolio of projects in Italy, Egypt and Croatia from London-listed Energean for up to £945mn.

The acquisition is the latest foray into the upstream oil and gas sector by the US-headquartered fund, which has continued to buy and sell producing assets even as most of its competitors have backed away from such investments.

The new company will be chaired by former BP chief executive Tony Hayward and focus on producing gas from offshore fields in the Mediterranean Sea to supply markets in Europe and north Africa. Hayward is also chair of Carlyle’s Colombia-focused oil producer SierraCol.

While the initial plan is to increase production from the former Energean assets to 50,000 barrels of oil equivalent a day from about 34,000 boe/d last year, Carlyle signalled that it was likely to use the new structure to make further acquisitions.

“I think what excites us is to have a platform now in the region to actually go after this opportunity,” Parminder Singh, a managing director at the buyout group, told the Financial Times. “It’s a target-rich environment.”

The deal follows a familiar playbook for Carlyle, which alongside other investors in 2017 acquired a series of oil and gas assets including in the North Sea and Indonesia from French group Engie for $3.9bn before selling the company, known as Neptune, to Italy’s Eni last year in a $4.9bn deal.

While other private equity groups have stopped investing in upstream projects, in some cases due to climate concerns, Carlyle argues it has been able to reduce the carbon intensity of operations at the businesses it has owned, thereby reducing overall emissions and increasing the value of the assets to the next owner.

“It’s not something that we need to do as a box-ticking exercise to get legitimacy or permission from LPs or society,” said Bob Maguire, co-head of Carlyle International Energy Partners. “I see it as something that actually has real commercial value.”

Energean acquired the assets in Egypt, Italy and Croatia from Edison E&P in 2020 for $284mn. The sale comes as new wells at the projects in Italy and Egypt are about to start production.

Carlyle has agreed to pay a guaranteed $820mn for the portfolio, including $504mn in