An important week looms for TheCityUK, the body established to represent Britain’s battered financial services industry. Next Monday, the organisation will hold its first formal board meeting — in the eye of the twin storms around the annual payment of mega-bonuses by the investment banking industry and the potential impact of the Government’s bank payroll tax on the City’s international competitiveness.
I understand that among those recruited to TheCityUK board are Elizabeth Corley, the chief executive of Allianz Global Investors Europe, and Sean McGovern, director and general counsel of Lloyd’s of London.
Both represent a refreshing influx of a new generation of financial services leaders and have been brought in by Stuart Popham, the senior partner in Clifford Chance, the magic circle law firm, and TheCityUK’s chairman. Alongside them on a separate advisory board are likely to be Sir Win Bischoff, the chairman of Lloyds Banking Group, and Bob Wigley, the author of last year’s report for Boris Johnson, the Mayor of London, that recommended the establishment of a new promotional body for the financial services industry.
One key role in the body, however, remains unfilled: chairman of TheCityUK’s domestic mandate. Given the esteem within which the sector is currently held, that will not be a job for the faint-hearted.
? If 2008 was the year of the bank bailout and last year was dominated by rescue fundraisings by public companies, could 2010 be a bumper year for megacap break-ups?
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That is one of the intriguing ideas floated in a piece of analysis produced by the leading hedge fund manager GLG Partners.
In it, John White and Jason Mackay, co-managers of GLG’s Alpha Select Fund, predict that investors’ cash will be driven towards large multinationals just as they are trading at a record low price/earnings ratio relative to mid-cap companies. “These [larger] companies have a unique opportunity to list businesses in faster-growing economies such as China where ratings are far higher or indeed split themselves up to realise shareholder value where the market is clearly applying a ‘conglomerate discount’,” the authors argue.
The research does not identify likely candidates in the FTSE 100 to be broken up but City analysts have frequently pondered the value that could be unlocked by the likes of HSBC or Vodafone by separating their developed and emerging markets businesses.
The imminent likelihood of China allowing foreign companies to list on its mainland makes this an enticing prospect.
? More intrigue surrounding the recent departure from Seymour Pierce of Richard Feigen, its managing director.
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I understand that the transaction that resulted in his decision to step down related to Media Square, the marketing services group. The nature of the business that Seymour Pierce was carrying out is unclear, but I am also told that there may be significant developments in the company, which is chaired by the media executive Roger Parry, in the not too distant future.
? The race out of the blocks to launch the year’s first major stock market flotation is preoccupying capital markets bankers across the City.
My money is on Travelport, the travel services provider owned by Blackstone, taking that accolade. The US buyout firm has hired at least four banks — Barclays Capital, Credit Suisse, Deutsche Bank and UBS — to prepare the listing of an undisclosed stake in the business, and an announcement may come as early as this month.
Now that some stability has returned to the stock market after the Dubai wobble at the end of last year, others will not be too far behind.
Merlin Entertainments, which is recruiting a new crop of non-executive directors after the appointment of Sir John Sunderland as its chairman, is also keen to list well before the end of the first quarter of 2010.
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Merlin, which owns Legoland and Madame Tussauds, is another Blackstone portfolio company, suggesting that the firm’s limited partners can expect some appetising rewards.
New Look, the fashion retailer, which John Gildersleeve joined as chairman this week, is another candidate to come to market imminently, although two other chains look more likely to be sold to financial investors than to list on the stock market. Both Pets at Home and Matalan are making progress on auctions that look like attracting bumper valuations. Expect these to prefigure a far busier year for the private equity industry.
? Mark Kleinman is City Editor of Sky News.
skynews.com/kleinman