Major International Business Headlines Brief::: 28 November 2019

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Major International Business Headlines Brief::: 28 November 2019

 


 

 


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*  South African government says working to ensure SAA's survival

*  Kenyan parliament body cuts finance ministry's request for extra spending

*  South Africa business confidence improves after two years - Survey

*  Botswana's GDP to slow to 3.5% in 2019 - IMF

*  South African owner of Virgin Active, New Look to raise equity to deal with debts

*  Woolworths posts 2.2% rise in 20-week sales

*  Egypt's Rameda Pharmaceutical to float 49% stake on EGX

*  Nigeria holds rates after border closures spur inflation

*  The big election trade-off - what have we learned?

*  Twitter prepares for huge cull of inactive users

*  Black Friday: US couple charge shoppers to queue

*  Tata Steel: 1,000 UK jobs to go amid worldwide cuts

*  Victoria Beckham fashion label makes another loss

*  Manchester City investment from US breaks global sports valuation

*  UK 'has particularly extreme form of capitalism'

*  Ola: Ride-sharing firm to launch in London 'within weeks'

*  Survey finds more North Sea firms looking to diversify

 

 


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South African government says working to ensure SAA's survival

JOHANNESBURG (Reuters) - South Africa’s public enterprises ministry said on Wednesday it was working with struggling state airline South African Airways (SAA) to ensure that it could continue to operate.

 

SAA suffered a crippling strike this month which pushed the airline to the brink of collapse.

 

“The strike at SAA with consequential cancellation of bookings has resulted in a sudden deterioration of SAA’s financial position,” the ministry said in a statement. “The Department of Public Enterprises is working together with SAA to urgently formulate immediate actions ... to enable SAA to carry on its business.”

 

 

 

 

 

 

 

 

 

 

 

 


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Kenyan parliament body cuts finance ministry's request for extra spending

NAIROBI (Reuters) - A Kenyan parliament committee has cut the extra funding the finance ministry had requested in the 2019-20 budget, saying the ministry’s revenue collection will fall short of forecasts.

 

In mid-November, the finance ministry requested an 86.60 billion shilling, or 3% rise in spending for roads, health, and projects to support the manufacturing sector, a priority of President Uhuru Kenyatta.

 

But the parliament’s budget and appropriations committee slashed the amount to 49.77 billion shillings, according to its report dated Nov. 26, seen by Reuters on Wednesday.

 

The committee said the government’s revenue collection performance for 2019-20, which ends next June, may fall short by about 120 billion shillings to 1.7 trillion shillings.

 

“Given the likelihood of underperformance of the revenue collection for 2019/20, if the supplementary budget was to be approved as submitted, the financing gap will have to be met from additional borrowing,” the report said.

 

The original supplementary budget had forecast the fiscal deficit at 6.3% of GDP in financial year 2019/20, which began in July, up from 5.9%.

 

With elevated borrowing, especially from China, in recent years for projects like a new railway line linking the port of Mombasa with the hinterland, the country’s growing debt stock has raised concerns among the public.

 

Total public debt stood at 62.3% of GDP as of June, the World Bank said in late October.

 

When Kenyatta took office in 2013, total public debt stood at about 42% of GDP. The government has justified the higher borrowing, saying it is required for infrastructure.

 

Finance Minister Ukur Yatani, who was appointed in July after the previous minister was charged with graft, has said he is committed to cutting the deficit by reducing spending and boosting revenue collection.

 

The budget committee also said that the finance ministry gave insufficient information to justify the increased spending and that it introduced projects in the supplementary budget that were not highlighted when it was first read in June.

 

It also lambasted the ministry for proposing cuts in the Judiciary and parliament budgets.

 

“This should never happen in future, as this is against the constitution,” the report said.

 

 

 

South Africa business confidence improves after two years - Survey

(Reuters) - South Africa’s business confidence improved for the first time in two years, a survey showed on Wednesday, owing to a recovery in residential activity and on expectation of a good shopping season for retailers.

 

The Rand Merchant Bank (RMB) business confidence index (BCI), compiled by the Bureau for Economic Research, was at 26 points for the fourth here/BER%20Business%20Confidence%20Index%202019Q4 quarter. In the third quarter, BCI hit a two-decade low to 21 points.

 

Confidence among retailers was also boosted by sales of durables, while residential activity recovered after three quarters of weakness.

 

However, a large majority of the survey’s 1,800 respondents in Africa’s most industrialized economy showed signs of pessimism.

 

“For us to convincingly conclude that the long and persistent downturn in the RMB/BER BCI has bottomed out will take, not one, but several quarters of improvement in sentiment driven by a consistent recovery in underlying activity,” Ettienne Le Roux, chief economist at RMB, said.

 

The survey comes close on the heels of an IMF warning on the country’s fiscal position and ratings agency S&P Global downgrading the outlook on its credit rating to negative.

 

Since taking over in early 2018, President Cyril Ramaphosa has been trying to stimulate economic growth by winning back foreign investors, easing policy log-jams and reforming cash-guzzling state firms, particularly power utility Eskom, which relies on government money to stay afloat.

 

However, his plan to split Eskom into three entities, seen as a centrepiece of economic reforms, has struggled to get off the ground.

 

A new chief executive officer for Eskom was appointed last week and the government has pledged to give the company more than 100 billion rand ($6.80 billion) in bailouts over the next two fiscal years.

 

($1 = 14.7075 rand)

 

 

 

Botswana's GDP to slow to 3.5% in 2019 - IMF

GABORONE (Reuters) - Botswana’s economic growth will slow to about 3.5% in 2019 from 4.5% in 2018, before speeding up to around 4.2% in 2020 if the southern African nation can shake-off the effects of weak diamond exports and drought, the IMF said on Wednesday.

 

“The outlook is subject to significant downside risks, including a global rise in protectionism, a faster-than-anticipated slowdown in China and in the euro area, and continued slow growth in South Africa,” said the International Monetary Fund in a statement.

 

 

South African owner of Virgin Active, New Look to raise equity to deal with debts

JOHANNESBURG (Reuters) - Virgin Active and New Look owner Brait said it plans to raise up to 5.6 billion rand ($381 million) via a rights issue and other measures to tackle its high debts, roiling the South African investment firm’s shares on Wednesday.

 

A trainer guides a gym member punching a sandbag at Virgin Active fitness club in central Singapore, March 5, 2019. REUTERS/Loriene Perera/File Photo

Shares in Brait, the majority owner of gym brand Virgin Active and British clothing group New Look, were down 15.15% to 14 rand by 1403 GMT after it proposed an equity capital raising of between 5.25 billion rand and 5.6 billion rand.

 

This includes a fully underwritten rights offer of 5.25 billion rand ($357 million) to existing shareholders.

 

Brait said it had a core portfolio of “distinctive, financially strong and cash generative investments” but these were undervalued due its high debts and concerns over its ability to meet its debt obligations.

 

The company said its recapitalisation plan includes new equity “to reduce debt to a sustainable level” and a partial repurchase of 350 million pounds ($449 million) of its convertible bonds due on Sept. 18, 2020.

 

This will be funded by the issuance of about 150 million pounds of convertible bonds due in December 2024, and cash.

 

The equity capital raising will introduce Ethos as a new strategic partner through its investment of 1.350 billion rand and it will also become an adviser to Brait.

 

Brait said its existing lenders Rand Merchant Bank and Standard Bank have agreed to amend the terms of the Brait Mauritius Limited revolving credit facility (BML RCF) and extend its maturity by three years.

 

The net proceeds of the equity capital raising will be used to repay the remaining portion of the outstanding bonds at or before their maturity and to partially repay the BML RCF, as well as for general corporate and financing purposes.

 

Brait’s net debt as of Sept. 30 of 11.965 billion rand includes two large maturities in 2020, namely the 350 million pounds of unsecured outstanding bonds and the Mauritius revolving credit facility maturing on Dec. 6, 2020.

 

After the recapitalisation, Brait said it intends to form a new board and propose it to shareholders. Brait also said it would re-evaluate the costs and efficiencies of its group structure as part of a new strategy.

 

($1 = 0.7794 pounds)

 

($1 = 14.7075 rand)

 

 

 

Woolworths posts 2.2% rise in 20-week sales

JOHANNESBURG (Reuters) - South African retailer Woolworths Holdings Ltd reported a 2.2% rise in group sales for the 20 weeks ended Nov. 11, as strong performance in its home market offset weakness at its Australian upmarket department store chain, David Jones.

 

Food sales increased by 8.8% from a year earlier while its South African fashion, beauty and home sales grew by 2.8%, the company said in a statement.

 

Sales at David Jones for the period declined by 2.1%, weighed down by disruptions at its Elizabeth Street store in Sydney due to refurbishment.

 

David Jones has been struggling to contend with subdued consumer spending in a slowing Australian economy and pressures faced by department store operators as shoppers switch to online players such as Amazon.com Inc, or speciality fast fashion brick-and-mortar stores like Inditex’s Zara.

 

 

 

Egypt's Rameda Pharmaceutical to float 49% stake on EGX

CAIRO (Reuters) - Egypt’s Rameda Pharmaceutical is planning to float 49% of its shares on the Egyptian stock exchange and expects to start trading on Dec. 11, it said on Wednesday.

 

Rameda hopes to raise 1.755 billion Egyptian pounds ($109 million) in the share offer, which will be made in two tranches priced at 4.66 pounds per share, it said in a prospectus published in Egyptian newspapers.

 

One tranche, representing a 5% stake, will be sold to small investors in a public offering, and the remainder sold in a private offering. A company official told Reuters that the public offering would begin on Thursday and last for five days.

 

Rameda was established by a group of Gulf investors in 1994 and manufactures and sells a wide range of branded generic pharmaceutical products, exporting to six countries, according to its website.

 

The group’s three factories in Cairo’s 6th of October industrial zone house 20 production lines, and it marketed 97 products as of 2018. Last year its revenues reached 805 million pounds.

 

It plans to use proceeds from the flotation to expand its product range and potentially acquire other pharmaceutical companies, it said last month when it announced its intention to float.

 

($1 = 16.0600 Egyptian pounds)

 

 

 

 

Nigeria holds rates after border closures spur inflation

ABUJA (Reuters) - The Nigerian central bank left its benchmark lending rate on hold at 13.5% on Tuesday, after a government decision to close borders with neighbouring countries sent inflation to a 17-month high last month.

 

Central bank Governor Godwin Emefiele told a news conference in the capital Abuja that the decision by the bank’s monetary policy committee (MPC) was unanimous.

 

He said the impact of the border closures on prices was “reactionary and temporary” and that the medium-term benefits of the government’s decision outweighed the short-term costs.

 

Emefiele said he would advise the government to maintain the closures in the interests of boosting economic output, which has been recovering relatively slowly in the non-oil sector.

 

“In view of the uptick in inflationary pressures, (the MPC) decided that the balance of risks was in favour of protecting price stability,” Emefiele said, after data last week showed inflation hit 11.6% in October.

 

Emefiele said a central bank decision to set a minimum loan-to-deposit ratio for lenders had helped lift economic growth to almost 2.3% in the third quarter, adding that the policy must be sustained as it had led to a drop in interest rates.

 

Some banks have been caught out by the initiative, incurring penalties from the central bank.

 

The majority of economists polled by Reuters last week predicted that the MPC would keep the lending rate on hold in Africa’s largest economy and top crude oil producer.

 

The central bank has been trying to boost growth by encouraging commercial banks to lend, but it has also kept interest rates high and liquidity tight to support the currency.

 

The bank forecasts economic growth of 2.2% this year, while the International Monetary Fund expects growth of around 2.3%.

 

 

 

The big election trade-off - what have we learned?

The emergence of these lengthy secret accounts of two years of US-UK trade discussions are important for several reasons.

 

They are the clearest account of a deal that could be done and dusted in the Parliament that is about to be elected.

 

Almost zero detail on the approach to such a deal has been outlined in manifestos.

 

The documents show there could be widespread consequences, not just for the economy, but also important trade-offs to be made by the government elected next month.

 

NHS Plot?

The papers don't show a secret plot to sell the NHS or a "plot against the country".

 

But they do show that pharmaceutical pricing has been on the table, and has been discussed between UK and US officials and UK and the US pharmaceutical industry.

 

That is not a surprise, it was clear from the official US Trade objectives published in February that sought "procedural fairness" and "full market access" for US pharmaceutical companies.

 

UK-US trade deal - what do the leaked documents show?

General election 2019: Boris Johnson vows to 'forge a new Britain'

Conservative Party manifesto 2019: 13 key policies explained

So they have been discussed in scoping discussions by officials. But the prime minister and the Conservative manifesto promises voters that the "price the NHS pays for drugs will not be on the table" - presumably in the future. The PM is promising to resist and reject the US strategic objective to increase the price paid to its drugs companies.

 

Chicken and food standards

There are clear references to US negotiators asking the UK to diverge from existing EU standards for "Pathogen Reduction Treatments", which include the chlorination of chicken in order to remove bacteria.

 

The US team offered to share its marketing material on the benefits of chlorinated chicken, to help persuade the public. Also the US raises EU restrictions on anti-microbial usage as "a significant concern".

 

It was the Conservative government that pushed hard for such restrictions in the first place amid fears that their overuse is rendering them increasingly ineffective.

 

One meeting was described as "challenging and difficult" because Theresa May's Chequers deal would have prevented changes on this. The now PM Boris Johnson resigned from Cabinet because of Chequers, and such changes are now possible under his deal.

 

The Conservative manifesto says we "will not compromise our high food standards".

 

Digital tax

Big US tech firms are unhappy with the idea of the government's tax on digital services, and it has been described as a deal breaker for a US-UK trade deal. The issue wasn't raised by US officials according to the documents, but it is mentioned by UK officials who anticipate that it will feature as a "senior/political" issue.

 

The Conservatives have a manifesto commitment to implement the tax.

 

Economic impact

The big picture here is that US officials repeatedly question Theresa May's decision to keep the UK economy close to the EU's. The former PM did this because of concerns of the manufacturing industry.

 

US negotiators said repeatedly that such a close relationship would harm prospects of a US deal, even apparently welcoming the possibility of No Deal as "all to play for". This broad position has been backed by the current PM, who is offering the electorate a more distant relationship with Europe in order to pursue a US trade deal.

 

That is good for some sectors and regions, and bad for others, such as for example car manufacturers dependent on the free flow of parts around the EU. The papers show that there was an attempt to quantify the benefits of a US trade deal, stating: "the macroeconomic results were small".

 

But a US-UK deal alongside a more distant "hard Brexit" with tariffs between the UK and the EU was both less good for the UK, and better for the USA. In particular, a "hard Brexit scenario" saw a "larger expansion in US exports in dairy and meat" to the UK.

 

The real message in these documents is not about an NHS plot, it is about shining some light on one of the most important sets of decisions due to occur in the next Parliament. A decision with big implications and trade-offs for jobs and growth up and down the country.--BBC

 

 

 

 

Twitter prepares for huge cull of inactive users

Twitter will begin deleting accounts that have been inactive for more than six months, unless they log in before an 11 December deadline.

 

The cull will include users who stopped posting to the site because they died - unless someone with that person's account details is able to log-in.

 

It is the first time Twitter has removed inactive accounts on such a large scale.

 

The site said it was because users who do not log-in were unable to agree to its updated privacy policies.

 

A spokeswoman also said it would improve credibility by removing dormant accounts from people's follower counts, something which may give a user an undue sense of importance. The first batch of deleted accounts will involve those registered outside of the US.

 

The firm bases inactivity on whether or not a person has logged in at least once in the past six months. Twitter said the effort is not, as had been suggested by some users on the network, an attempt to free up usernames.

 

That said, previously unavailable usernames will start coming up for grabs after the 11 December cut-off - though Twitter said it would be a gradual process, beginning with users outside of the US.

 

In future, the firm said it would also look at accounts where people have logged in but don't "do anything" on the platform. A spokeswoman would not elaborate, other to say that the firm uses many signals to determine genuine human users - not just whether they interact with, or post, tweets.

 

Emailed warning

The site has sent out emails to users of accounts that will be affected by the deletions. The firm would not say how many current accounts fit the criteria, although it is expected to be in the many millions. It will send out more notice closures closer to the deadline.

 

The cull will not affect Twitter's reported user numbers, as the firm bases its usage level only on users who log-in at least once a day. According to its latest earnings report, from September, Twitter has 145m "monetisable" daily active users (users who come into contact with Twitter's advertising on a daily basis).

 

"As part of our commitment to serve the public conversation, we’re working to clean up inactive accounts to present more accurate, credible information people can trust across Twitter," the firm said about the upcoming account removals.

 

"Part of this effort is encouraging people to actively log-in and use Twitter when they register an account, as stated in our inactive accounts policy.”

 

It means users who have died will have their accounts removed unless a loved one or other person is already in possession of their log-in details, and is able to sign in and accept Twitter's latest privacy policy.

 

Twitter's current policy offers only deactivation of a dead person's account once a trusted third-party - a parent, for example - has proven their identity. However, the policy states that in no circumstances would Twitter grant access to the account, which would prevent deletion.

 

The firm does not, unlike Facebook, offer a "memorialisation" option that freezes the account in place and disallows new interactions - a measure to prevent abuse.

 

Since inactivity is based on logging in, not posting, bot accounts - such as those which automatically tweet news or alerts - would also come under the cull if the account owners do not log-in before the December deadline. So too would accounts set up specifically as an archive, such as @POTUS44, a collection of all the tweets made by President Barack Obama while in office.--BBC

 

 

 

Black Friday: US couple charge shoppers to queue

A US couple is offering to camp out all night and hold places in the shopping queue for those who want to splurge on Black Friday deals.

 

"My husband has great ways of thinking when it comes to money," says Alexis Granados, of her partner Steven Velasquez.

 

He recently lost his job as a scale operator for a recycling company.

 

The pair are charging $50 (£38) each to wait outside any store in Upland, California, the night before the Black Friday sales.

 

Being paid to queue is not new - but part of a growing phenomenon within what is commonly known as the gig economy.

 

On Task Rabbit and Bidvine, UK sites that advertise services from the self-employed, people can earn between £15 and £20 a time.

 

Meanwhile, Placer, an app available in the US has been created solely to cater for people who are too busy to queue and willing to pay others to do it for them.

 

'Fun'

An estimated 165.3 million people are expected to hit the shops in the US between Friday and Monday, the National Retail Federation says.

 

The shopping bonanza, which originated in America, falls on the Friday after the Thanksgiving holiday - when workers in the US usually have the day off.

 

And the California-based Granados couple say the work will help them to make ends meet. They are looking for more traditional jobs, but in the meantime say they're happy to pick up odd jobs where they can.

 

Neither have done anything like this before, but she says "I'm pretty sure it won't be our last time. It's actually easy money when you think about it".

 

The couple have a car, where they can warm up during their queuing time.

 

They are advertising their queuing service on social media and several people have expressed an interest. The duo guarantee a good place in the queue and if their customer is not satisfied they say they will not charge for the service.

 

"We used to be homeless, so it is not really a pain for us," says Ms Granados, saying the money means a lot to them.

 

Currently the young couple, who are in their 20s, have a housing voucher that helped them get off the street. "It was actually a stepping stone for us and helped us grow as adults," says Ms Granados.

 

Housing assistance in the US is offered to people with incomes under a certain threshold who need help finding a place to live.

 

With a housing voucher, people can secure a place in social housing.--BBC

 

 

 

Tata Steel: 1,000 UK jobs to go amid worldwide cuts

Tata Steel has announced it expects to cut 1,000 jobs across the UK as part of the company's restructuring plans.

 

Two thirds of the job losses will be management and office-based roles, Tata said.

 

In the Netherlands 1,600 positions are also set to go, with 350 others cut elsewhere in the world.

 

Tata Steel's Europe CEO, Henrik Adam, said the company "cannot afford to stand still" as "the world around us is changing fast and we have to adapt".

 

Steelworker's union Community said it was "seriously concerned".

 

"We have been presented with short-term plans, which only create worry and uncertainty and do little to inspire confidence," it added.

 

"It feels like the company is just managing decline and we need a significant change of direction that can inspire the workforce that they have a future."

 

Tata has one steelmaking site and five other facilities in Wales.

 

Port Talbot employs 4,000 workers - nearly half of Tata's UK workforce - but the firm is yet to specify which UK locations will suffer the cuts.

 

 

The firm first announced plans to cut 3,000 jobs across its European business last week, in a bid to come to terms with a "severe" international steel market.

 

In a bid to improve financial performance, the company also expects to increase its sales of higher-value steels, optimise production processes and reduce its procurement costs.

 

Community said the job cuts were "a consequence of management failure to have a Plan B following the collapsed of the joint venture with Thyssenkrupp".

 

Economy Minister Ken Skates said: "This will understandably be a worrying time for Tata Steel employees and their families in Wales.

 

"Tata Steel has previously confirmed that they intend to seek to avoid compulsory redundancies and I will be impressing on the company the importance of standing by this commitment."

 

Bethan Sayed, Plaid Cymru Assembly Member for South Wales West, said: "The next time Tata Steel make an announcement on potential job losses, I think everyone would prefer it come with more precise information."

 

David Rees, Labour AM for Aberavon, said the "uncertainty" of not knowing where the UK roles would be cut "does not help steelworkers, their families and the wider community".

 

Suzy Davies, Conservative AM for South Wales West, said it was "extremely distressing for all of the Port Talbot Tata Steel workers and their families".

 

Tata employs about 20,000 people worldwide and is owned by India's Tata.

 

Tata's UK plants were put up for sale in March 2016, leading to months of uncertainty.

 

However, the move was put on hold and a 10-year £1bn investment plan was announced for the UK's biggest steelworks at Port Talbot - if market conditions allowed - along with a commitment to try to avoid compulsory job losses.

 

Tata explored merger options with Thyssenkrupp over the next two years and a deal was finally agreed in the summer of 2018.

 

But competition concerns emerged over creating what would be Europe's second biggest steelmaker and the deal fell through.

 

The European Commission, which blocked the merger, said the companies "did not offer adequate remedies" to pricing and competition concerns.--BBC

 

 

 

Victoria Beckham fashion label makes another loss

Victoria Beckham's fashion business has posted another annual loss as demand for the former Spice Girl's high end clothes "plateaued".

 

Victoria Beckham Limited, which has not made a profit since it launched in 2008, reported a loss of £12.3m for 2018.

 

Sales slipped 16% to £35m, amid weaker wholesale demand.

 

Chairman Ralph Toledano said sales of clothing and accessories had levelled off after years of growth.

 

"The performance was in line with expectations, so we were not surprised. Our goal is to reach profitability as soon as possible," he told trade journal Business of Fashion.

 

Mrs Beckham launched her label in 2008 with a collection of luxury dresses, and now sells fashion and accessories in more than 400 stores around the world.

 

But while she has received critical praise, the label has struggled financially, leading Mrs Beckham to say earlier this year that it was "not a vanity project".

 

"If I want this brand to still be here in 10, 20, 30, 40 years' time, I need to break even, and then I need to be profitable," she told the Financial Times in March. "We're on the right track to do that, but it's not going to happen tomorrow."The company has been trying to improve its performance, launching its own cosmetics range, striking a partnership with Reebok, and making price cuts.

 

But it said weaker demand from wholesale customers had hit performance in 2018.

 

Mr Toledano said: "I firmly believe that our destiny is in our hands. We have a great talent in Victoria and, if you take that asset with a dream team, we can do it."

 

Mrs Beckham controls the business with her husband and former Manchester United star David Beckham, via their company Beckham Brands Holdings.

 

The group, which manages Mr Beckham's endorsement deals and stake in football club Inter Miami FC, also saw a sharp fall in sales in 2018.

 

Losses at Mrs Beckham's label were partly to blame, as well as weaker income from Seven Global, a joint venture that manages some of his corporate partnerships.

 

It helped push Beckham Brand Holdings to its first ever net loss of £1.6m in 2018, which followed a net profit of £12.3m in the previous year.--BBC

 

 

 

Manchester City investment from US breaks global sports valuation

The parent company of Premier League champions Manchester City has announced a £389m investment from US private equity firm Silver Lake.

 

The deal breaks a record in global sports valuations, making holding company City Football Group (CFG) worth £3.73bn ($4.8bn).

 

The US private equity firm is buying around 10% of CFG's worldwide business.

 

City are currently third in the Premier League, and have qualified for the Champions League last 16.

 

CFG has a stake in seven football clubs across the world, including in the US, Australia, Japan and China.

 

'Premium sports content'

Group chairman Khaldoon Al Mubarak said: "We and Silver Lake share the strong belief in the opportunities being presented by the convergence of entertainment, sports and technology and the resulting ability for CFG to generate long-term growth and new revenue streams globally."

 

Silver Lake, which is best known for technology investing, said its investment would "help drive the next phase of CFG's growth in the fast-growing premium sports and entertainment content market".

 

Egon Durban, managing director of Silver Lake, will represent the US backers on the CFG board as part of the deal, first reported in the FT.

 

Earlier this year Joe Tsai, co-founder of China's online giant Alibaba, bought a controlling share in the Brooklyn Nets basketball team, which gave it a $2.35bn valuation, the highest for a US sports team.

 

Manchester rivalry

Earlier in November, Manchester City announced it had brought in a record £535.2m last season.

 

It was City's 11th successive year of revenue growth and closed the gap on local rivals Manchester United, the Premier League's richest club.

 

The figure is projected to rise again next year given Man City have qualified for the knockout stages of the Champions League.

 

Payments from a £45m-a-year Puma kit deal will also start to take effect.

 

Media rights

Will Walker-Arnott, senior investment manager at Charles Stanley, told BBC Radio Four's Today programme: "Silver Lake is a US private equity firm which is better known for investing in technology stocks such as Alibaba and Skype.

 

"But more recently it has been getting into sports rights and got invested in the Ultimate Fighting Championship."

 

He says the firm has probably been drawn to Manchester City because of its lucrative media rights.

 

"We've got a lot of large broadcasting firms like BT, Sky and Amazon all bidding for [Premier League football] rights," he said.

 

There is one "question mark" hanging over the lofty valuation, however.

 

"Manchester City are being investigated by Uefa for possible breaches into financial fair play, so [Silver Lake] are obviously looking over that," Mr Walker-Arnott said.

 

Earlier this month the club's appeal to the Court of Arbitration for Sport (CAS) asking for Uefa's probe to be halted, was rejected.

 

The club is at risk of being banned from the Champions League and will now face judgement from Uefa's adjudicatory chamber.--BBC

 

 

 

UK 'has particularly extreme form of capitalism'

The UK has one of the most extreme forms of capitalism in the world and we urgently need to rethink the role of business in society. That's according to Prof Colin Mayer, author of a new report on the future of the corporation for the British Academy.

 

Prof Mayer says that global crises such as the environment and growing inequality are forcing a reassessment of what business is for.

 

"The corporation has failed to deliver benefit beyond shareholders, to its stakeholders and its wider community," he said.

 

"At the moment, how we conceptualise business is, it's there to make money. But instead, we should think about it as an incredibly powerful tool for solving our problems in the world."

 

He said the ownership structure of companies had made the UK one of the worst examples of responsible capitalism.

 

"The UK has a particularly extreme form of capitalism and ownership," he said.

 

"Most ownership in the UK is in the hands of a large number of institutional investors, none of which have a significant controlling shareholding in our largest companies. That is quite unlike virtually any other country in the world, including the United States."

 

This heavily dispersed form of ownership means none of the owners is providing a genuinely long-term perspective on how to achieve goals while also making money.

 

Business shake-up

Established in 1902, the British Academy is the UK's national academy for the humanities and the social sciences. In Principles for Purposeful Business, it proposes a new formula for corporate purpose: "to profitably solve problems of people and planet, and not profit from causing problems."

 

The Academy's report comes a week after the Labour Party manifesto proposed the biggest shake-up of how business is owned and run in decades. It included the nationalisation of water, rail, energy, mail, broadband and the forced transfer of company shares to employees.

 

Prof Mayer agreed that the Labour manifesto was bold in its ambition, but said it was too traditional and old-fashioned in its way of achieving its aims.

 

"It's very much focused on one particular means of delivery, that is through the state," he said.

 

"Now, the state has an important part to play. But we should think about the state in a more imaginative way, as to how it can promote successful business, how it can reform the nature of business in society. That's what we're really looking for."

 

Why profit should not be the only motive

One thing on which he did agree with the Labour Party was the need to rewrite the Companies Act to specifically enshrine directors' duties to other stakeholders in law. Currently, the Act says that other stakeholders interests are subordinate to shareholders.

 

Where he doesn't agree is in the demonisation of billionaires: "It's not obscene to make a lot of money in the process of creating real solutions to the problems of the world."

 

But he hoped that such wealth would be recycled through foundations, for example, which could be the kind of long-term owners needed for the next generation of problem-solving companies.

 

Profit motive

Not everyone agrees, of course, that the pursuit of profit, within the confines of the law and social norms, is bad. Matthew Lesh, from the Adam Smith Institute, says we should be cautious before we dismantle a mechanism that has produced innovation and a rise in absolute living standards.

 

"The profit motive has raised literally billions of people out of poverty by encouraging innovation and ensuring our finite resources are used exceedingly productively," he said.

 

"Mandating alternative purposes for business raises more issues than it solves. It removes the essential accountability between shareholders, whose investments are at risk, and corporate executives."

 

Some of these are age-old arguments between the Left and Right, but there is plenty of evidence that something fundamental is changing deep in the heart of capitalist economies.

 

Since 1978, the American Business Roundtable of top chief executives has periodically issued Principles of Corporate Governance. For the last 40 years, all of them have reiterated the orthodoxy that corporations exist principally to serve shareholders. Until now.

 

In August it issued a new Statement on the Purpose of a Corporation, signed by 181 chief executives who committed to lead their companies for the benefit of all stakeholders - customers, employees, suppliers, communities and shareholders.

 

Even the famously private family that owns Mars has recently popped its head over the parapet to talk openly about the way it runs the chocolate-to-pet-food giant with annual sales of $35bn.

 

'Whatever it takes'

Mars chairman Stephen Badger admits things are different now.

 

"We've never felt the need to be public but times have changed," he said.

 

"The talent [employees] really want to know what the company they work for, stands for.

 

"Equally important is that the magnitude of the challenges facing the world - climate change, poverty, biodiversity loss - these are issues that we care deeply about.

 

"We've got less than 10 years to get this right - incremental change is not enough. We are prepared to spend serious money on this and if that means lower profits, so be it. Whatever it takes to get the job done,"

 

The challenge to companies is threefold. Staff who want to believe in the company they work for, consumers who may boycott the products of companies that don't get it and, of course, politicians who may legislate, tax or nationalise them out of existence.

 

Do the right thing?

But we should be cautious about announcing the death of shareholder power.

 

Unilever - the Anglo-Dutch makers of Marmite, PG Tips and 400 other consumer brands - has long been admired for its enlightened approach to its societal impact. In 2017, it received a surprise takeover bid from Kraft Heinz.

 

Its response was to accelerate the sale of some businesses, increase its dividend, cut costs by 12%, raise the amount of debt in the company and give a further €5bn to shareholders through share buybacks. Steps the then chief executive, Paul Polman, now says he would rather not have taken.

 

"Feel free to be responsible - but don't be complacent about the interests of your owners" was the clear message and lesson learned.

 

Alan Jope, the current Unilever chief executive, told the BBC that its focus on doing right by society and the environment was not out of fear of nationalisation, taxation or regulation, but out of fear that its products would be shunned by a new generation of consumers unless they got this stuff right.

 

Is that doing the right thing for the wrong reason? Not really. Does it matter if it is? Probably not.

 

Unilever's Mr Jope did have a supportive message for the Labour Party. When asked if he supported company law changes to discourage firms from placing shareholders above others, he gave a clipped and clear response: "Yep."

 

One thing is certain. No matter who wins the UK election, you can expect to hear the word "purpose" a lot in the next few years.--BBC

 

 

 

Ola: Ride-sharing firm to launch in London 'within weeks'

Indian ride-sharing firm Ola has begun signing up drivers in London ahead of plans to launch services in the capital "in the coming weeks".

 

It comes days after rival Uber was denied a new licence to operate in London after repeated safety failures.

 

Ola, which already operates in the UK, said it has held "constructive conversations" with local authorities.

 

The Indian firm was granted a licence from Transport for London (TfL) earlier this year.

 

"We are inviting the tens of thousands of private hire drivers across London to register themselves on the Ola platform, as we prepare to launch in the city in the coming weeks," Ola's Head of International Simon Smith said in a statement.

 

"We have had constructive conversations with the authorities, drivers, and local communities in London over the past months."

 

Mr Smith said the company has built a "robust mobility platform for London which is fully compliant with TfL's high standards".

 

Ola's push into the London capital comes as rival Uber prepares to appeal against TfL's decision to strip the firm of its licence there.

 

Uber loses licence to operate in London

'Uber genuinely was a lifeline'

On Monday, the regulator said the taxi app was not "fit and proper" as a licence holder, despite having made a number of positive changes to its operations.

 

Uber initially lost its licence in 2017 but was granted two extensions, the most recent of which expired this week.

 

The US ride-share giant said the decision was "extraordinary and wrong". It said it had audited every driver in London over the past two months and strengthened its processes.

 

UK expansion

In July, Ola got a 15-month agreement for its entry into the London market. It began operating in the UK last year, with services in south Wales.

 

Uber rival Ola revs up to enter UK market

The Softbank-backed company touted its safety features - including driver facial recognition technology and an in-app emergency button to alert safety response teams - ahead of its London launch.

 

Ola operates in more than 250 cities across India, the UK, Australia and New Zealand.--BBC

 

 

 

Survey finds more North Sea firms looking to diversify

A growing number of North Sea oil and gas operators are looking to diversify into "less traditional activities" such as decommissioning and renewables, according to a survey.

 

A total of 86% of firms expressed "some likelihood" of doing decommissioning work in the medium term.

 

The survey also showed the highest proportion of contractors since 2016 expecting renewables work soon.

 

However, firms cited profitability and skills as barriers to diversification.

 

A quarter claimed recruitment challenges were the result of difficulty recruiting for non-traditional roles.

 

More than £15bn to be spent on North Sea decommissioning

Offshore decommissioning cheaper as industry becomes 'more efficient'

The Aberdeen and Grampian Chamber of Commerce (AGCC) survey was conducted in partnership with the Fraser of Allander Institute and KPMG.

 

More than half (52%) of respondents reported increasing demand for their products and services in non-oil and gas projects, with a further 25% saying they were "actively pursuing" work outside oil and gas. Only 11% said they were not planning further diversification.

 

Of those firms that had considered diversification, 34% flagged concerns around profitability and return on investment as the main barrier, closely followed by 31% of firms citing experience and skills within the organisation as a barrier.

 

In terms of operations within the UK Continental Shelf (UKCS), the survey suggested contractor confidence had continued to grow, despite ongoing uncertainty in the wider national economy.

 

The recovery in the value of production-related activity in the basin is also continuing, with a net balance of 43% of contractors reporting increased value of activity, and more than half expecting the value of work to continue to increase.

 

'More diverse'

AGCC research and policy manager Shane Taylor said: "It's clear that the energy mix in the future will be far more diverse and for our existing supply chain there's huge opportunity to be seized from diversifying into new markets and sectors proactively.

 

"Businesses continue to cite profitability and talent as some of the key barriers which prevent them from considering further work outside of the industry, with these challenges raised by around a third of our respondents respectively.

 

"Given that talent attraction is constraining the industry's ability not just to grow in the now but to diversify in the future, it makes it all the more important that the industry engages with key initiatives such as Roadmap 2035 to upskill current workers and attract the diverse workforce the industry will need to succeed in the coming decades."

 

A total of 90 firms, employing 55,000 people across the UK, took part in the autumn survey.--BBC

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 


 

 


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