The barbarians are back at the gates, and it looks like the retail sector is a target for change. As many have been predicting since the Covid-19 pandemic first struck, a combination of depressed share prices and piles of dry powder make a wave of private equity activity likely. In the crosshairs currently is WM Morrison, which has reported interest from private equity firm Clayton, Dubilier & Rice. If a deal went ahead it would represent one of Britain’s biggest leveraged buyouts since the 2008 crisis. The private equity firm put in an initial highly conditional offer of 230p per share for the supermarket, whichRead More →

PIRC recently held an ESG webinar focusing on the issues of industry and ownership concentration, and the questions that this might pose for investors. We are continuing to dig into the topic on behalf of our clients. But in the meantime we thought it useful to flag the issue of monopsony. Much of the emphasis in the literature on concentration relates to monopoly, where a dominant firm, or firms, has market power and can therefore have significant influence over prices. However, firms in concentrated industries might exert as much power as price-takers as price-makers. A single buyer is a monopsony. This is often understood asRead More →

PIRC has been engaging with companies and other stakeholders in the sector in the UK and elsewhere since the Covid-19 pandemic began, and held an investor webinar on the topic earlier in the year. This sector note summarises a number of our findings, and concerns about reporting of cases. It also makes a number of recommendations for investors in the sector. PIRC_sector_food_processingRead More →

If bankers’ bonuses became the symbol of an economic system gone astray during the financial crisis, share buybacks might become the equivalent during the Covid-19 outbreak. A range of commentators have criticised companies that have spent money on buybacks, leaving themselves financially vulnerable, and in some cases dependent on state support. You would think buybacks would have dried up weeks ago, but it doesn’t seem everyone has got the message. Take Frasers Plc, formerly Sports Direct. On 20th March it released an RNS stating that it was monitoring the affect of the Covid-19 outbreak closely. It warned: ’the Board expects that COVID-19 will cause significantRead More →

It’s time to say never again, again. More than a decade after the Stewardship Code was introduced, 25 years after the Greenbury Report, the UK is looking at a FTSE100 governance failure. This is becoming something of a trend. We all fretted about the failure of Carillion in 2018, we all wrung our hands when Thomas Cook fell over in 2019, now we can all despair about NMC Health. A FTSE100 is facing accusations of financial irregularities and is asking lenders for an ’informal standstill’ (which seems to translate as ’don’t ask for your money back right now’), half of its board has gone includingRead More →

What a week or so it has been for NMC Health. Back on 10 February, the company put out an RNS stating that its joint chair and founder Dr. B. R. Shetty was undertaking a review to establish the extent of his shareholding in the company, along with that of family members. It also stated that this review might also involve other shareholders’ interests. T he guts of the RNS reveal that shares in NMC held in a nominee account in the name of B. R. Shetty at Falcon Bank were transferred to a nominee account in the same name at First Abu Dhabi BankRead More →

Fresh into a new decade, and there are already signs that this year will see a further growth in forceful stewardship by institutional investors. For example, if we rewound to the start of the last decade the conventional wisdom was that using shareholder resolutions was an extreme form of engagement. Few large UK investors wanted to get involved in filing them, and votes in favour of ESG-oriented resolutions were generally low. If we can be excused a little toot on our own trumpet, we have always advocated the use of shareholder resolutions in order to make the AGM agenda more reflective of investors’ priorities, notRead More →

Controversial transport tech giant Uber hit another bump in the regulatory road this week when Transport for London (TfL) declined to grant the company a new private hire operator’s licence in response to its latest application. TfL said that while Uber has made a number of positive changes and improvements to its culture, leadership and systems in the period since the Chief Magistrate granted it a licence in June 2018 it has identified a pattern of failures by the company including several breaches that placed passengers and their safety at risk. Despite addressing some of these issues, TfL said it does not have confidence thatRead More →