Hugh Osmond, the pubs-to-pizza entrepreneur with an appetite for investment management, raised his bet on Phoenix Group before the “zombie fund” operator’s big move to the London stock market next week.
He dug into his own pockets to buy £1.4 million-worth of Phoenix shares, about 1 per cent of the company, at 640p apiece.
Phoenix, whose main listing is in Amsterdam, is likely to be valued at up to £1 billion when it transfers to London on Monday.
However, its management — including Ron Sandler, the chairman of both Phoenix and Northern Rock, and the chief executive, Jonathan Moss — think a valuation of its policies of £2 billion would be more like it.
Mr Osmond, the founder of Pizza Express and co-founder of Punch Taverns, would appear to agree. His Sun Capital investment group already owns 18 per cent, with TDR, the private equity firm, holding a similar amount.
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Phoenix, formerly the Pearl Assurance Group, manages closed life books, which throw off cash when the policies mature: £750 million last year and still more expected this year.
That should help to address £2.5 billion debts in short order, and some traders predicted a dividend of as much as £200 million. They also reckoned that, unless the market placed a far higher value on Phoenix, it was ripe for takeover.
The shares, which have only a secondary London listing at the moment, fell 21p to 641½p on a dreadful day for stock markets around the world.
The FTSE 100 retreated 157.46 points to 4,914.22, its lowest since September 2009. Every one of the 100 companies in London’s leading index gave ground, as fears mounted for the sustainability of the economic recovery, particularly in developed markets. Austerity measures, introduced in Britain as elsewhere, made “double dip” recession more likely, investors worried.
They were spooked initially by disappointing economic snapshots from China and Japan. That skittled commodity prices and the shares of the companies that extract them. Miners and oil producers dominated the list of those hardest hit.
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Chief among those was Rio Tinto, which fell 208p to £30.48 after the Chinese steelmaker Baosteel slashed its capacity target for 2012 by 38 per cent amid growing concern about declining demand for steel there.
Tomorrow, repayment falls due for €442 billion (£357 billion) of loans made a year ago at low rates to Europe’s lenders by the European Central Bank. That could potentially leave them short of cash. The amount rolled over should provide a clearer picture of the current state of the banking sector, and the availability of credit to lenders.
Barclays fell 18p to 267¼p because of concerns that a New York bankruptcy court may rule that the UK bank stitched up a cosy deal to buy the failed bank Lehman Brothers, and force it to pay compensation. Investors were also jittery about Barclays’ exposure to debt-laden European countries and the impact of the upcoming international reform to force banks to hold more capital against risky investment banking operations.
Standard & Poor’s cast around for European companies likely to have caught the eye of one or other American predator sitting on chests of cash. They included the drug company AstraZeneca, which fell 14½p to £29.47, though that was still the best performance by any Footsie company.
According to S&P, others in the firing line are the weapons maker BAE Systems, down 6¼p at 312¾p, and the infrastructure group Balfour Beatty, off 2¾p at 237¾p.
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Rumours resurfaced that Jupiter Fund Management may be mulling a bid for Gartmore, a rival. Jupiter fell 4¼p to 182½p, while Gartmore lost 3p to 111p.
A warning that sales this year would fall shy of expectations sent CVS 48½p, or almost a third, lower to 102p. A disappointed KBC Peel Hunt promptly told clients that shares in the veterinary services company were no longer worth buying.
Infrastrata, a gas storage specialist, jumped 10½p to 52p after finally signing an agreement with the American energy company eCORP International to that provided funding to get cracking on a gas storage facility on the Isle of Portland on the Dorset coast.
There were whispers that Source BioScience, 0.13p easier at 7.75p, would reveal today that it had won the tender to supply cytology services to Cervical Screening Wales for the second time. The company would provide cell analysis until July 2013, with the option to extend the agreement for a further two years.
A new contract worth almost £1.3 million over 18 months spurred Synchronica 0.125p to 2p. The company’s software, which allows basic mobile phones to send and receive e-mails, is to be installed on the handsets of an unnamed manufacturer that focuses on the former Soviet Union and Asia.
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New York
Shares tumbled after signs of slowing economies unsettled traders who were already uneasy about a global recovery. The Dow Jones industrial average was more than 300 points off at one stage before paring its slide to close 268.22 points down at 9,870.30.