Bit late for the tracker fund. If only FTSE Russell had kicked Evraz, Polymetal, Petropavlovsk and Raven Property out of the stock market indices sooner — before shares in the quartet imploded.
The Russian-focused quartet have been toxic ever since Putin’s assault on Ukraine, if not before. So it does look a bit late for the index compiler owned by the London Stock Exchange to be finally chugging into action. It says market “feedback” is that “major international brokerage firms” are “no longer supporting trading of these securities”. No kidding. Whatever, the tracker fraternity have no trades to mimic. The upshot? The four stocks will be ejected from the indices on Friday.
It’s all part of Londongrad’s belated clean-up: one that’s also seen the suspension of the global depository receipts in around three dozen companies, spanning the likes of Rosneft, Gazprom and Sberbank. The quartet being booted off the indices aren’t state-backed and, with one exception, don’t star a famous oligarch. Yet they’re a rum bunch.
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Most famous is Evraz: the steelmaker 29 per cent-owned by Roman Abramovich, the man desperate to sell Chelsea FC who Britain finally sanctioned last week. It triggered an overdue suspension of Evraz shares at 80¾p — down 70 per cent since Putin’s invasion of Ukraine. Plus a mass exodus of the non-execs. They included the senior independent director Sir Michael Peat: a man aboard for a decade, lately snaffling $254,000 a year. Perhaps the former private secretary to the Prince of Wales might like to donate his Evraz pay to the Ukraine humanitarian appeal. Failing that, he could always be stripped of his knighthood.
Elsewhere, goldminer Polymetal has been similarly friendless, with the shares down 85 per cent in three weeks — despite BlackRock topping up its stake to more than 10 per cent. Polymetal has also seen a mass resignation: six directors gone, including chairman Ian Cockerill. On top, there’s Petropavlovsk, mining’s version of Groundhog Day: a business typically in a state of internecine warfare without any help from Vladimir Putin. Its shares are down almost 80 per cent since he invaded Ukraine.
The last of the quartet? Raven Property, the owner of warehouses mainly around Moscow. It’s run by executive deputy chairman Anton Bilton, hubby of model Lisa B, and chief executive Glyn Hirsch. Floated in 2005, it followed up a year later with a £310 million fundraising at 115p. The shares today? 5¾p, with the group warning a fortnight ago that its “greatest uncertainty” was over access to the “funds of its Russian subsidiaries” and whether they “can be converted to the correct currency at a commercial exchange rate”.
The Raven duo are best known lately for their walk-on part in the Neil Woodford farrago. It was their firm Belasko that sponsored his dodgy Guernsey share listings: the ones that enabled him to claim that his fund hadn’t breached the 10 per cent cap on unquoted stocks. The pair also produced 2019’s deal that bought out Woodford’s 12 per cent stake in Raven for £26 million: a decent trade by his usual standards, given the entire Raven group is now valued at just £33 million.
Anyway, sadly this quartet will no longer be starring in your tracker fund. Don’t all complain at once.
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Digging in
Call that gratitude. Rio Tinto investors have just been treated to a $16.8 billion full-year dividend. So you’d think they might be a bit more chilled if the miner wants to spend just $2.7 billion on something more interesting: a bid to take majority ownership of its copper project in Mongolia. Think again: Rio shares fell 5 per cent to £52.99.
So much for the attempt by Rio boss Jakob Stausholm to clean up the messy corporate structure via which the miner holds its one third interest in Oyu Tolgoi. Rather than own it directly, Rio holds 51 per cent of the Toronto-listed Turquoise Hill, the owner of two thirds of the vast Gobi Desert copper mine. The rest is held by the Mongolian government.
Hence Stausholm’s offer to buy out Turquoise’s minorities. It would give Rio control of the project. And, as he put it, “strengthen” Rio’s clout in copper: a top net zero commodity, used in everything from electric cars to battery power. It would also leave Rio less skewed to iron ore.
Strategically, it makes sense. Yet Rio shareholders have grounds to be wary. Stausholm’s C$34-a-share offer is at a 32 per cent premium — for a project that’s been beset by delays and cost overruns, not to mention Turquoise writing off $2.4 billion of loans owned by Mongolia. There’s a risk, too, that Rio will have to pay more. Turquoise shares leapt a third to just below the offer price. Yet that may not be enough for hedge fund Pentwater, the owner of just under a tenth of the shares that last year launched a class action suit against Rio over the project’s rising costs. True, Rio’s offer potentially gets the minorities out of funding a $1.5 billion rights issue. But it may have to sweeten its bid.
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Even so, Stausholm knows Rio can easily afford to dig a little deeper. It’s no big deal if he does.
Fashion victim
Forget number-crunching. Fashion advice has long been the key forte of the Office for National Statistics. And, once again, the wonks haven’t disappointed. They’ve killed off men’s suits: the overpriced uniform slung out of the inflation basket after 75 years. Fewer blokes want to be trussed in a two-piece, what with trackie-bottomed working from home accelerating the fall in suit sales: down from five million to two million a year over the past decade, on Kantar estimates.
An alternative bit of clobber, “bin liners for kitchen use”, is also out of the basket. Still, luckily, pet collars for dogs or cats are in. Try wearing one of those to work instead.
alistair.osborne@thetimes.co.uk
