Mark Kleinman’s column: WANdisco fiasco, Co-op auction and Chelsea’s misfires
Mark Kleinman is Sky News’ City Editor and is the man that gets the City talking in his fortnightly City A.M. column.
It’s payback time
WANdisco? More like WANfiasco. Within weeks of the AIM-listed data software company letting it be known that it was solidifying its ambitions of pursuing a US stock market listing, the company went into freefall.
The emergence of fraudulent transactions based on apparently fraudulent sale invoices triggered the immediate suspension of its shares and a frantic battle for survival.
Stephen Kelly, the former Sage Group boss, was drafted in as interim chief. His first task has been accomplished: corraling City investors into a $30m fundraising which ensures it lives to fight another day.
Nonetheless, the slump in WANdisco’s share price in the wake of the resumption of trading tells its own story: a company with a market capitalisation of nearly £900m four months ago is now worth little more than £100m.
So a request to founder and former president and CEO David Richards, along with former finance chief Erik Miller that they repay nearly £650,000 in cash bonuses awarded last year feels entirely just.
It’s a gross failing that the pair’s contracts were not subject to malus and clawback provisions – something that WANdisco’s next permanent chairman will surely seek to rectify.
A closer glance at the company’s annual report underlines the moral imperative for Richards to agree to the company’s request.
No further detail is provided, but the payments look self-serving, to say the least.
Richards owes other shareholders a full explanation – as well as his bonus back.
Sadly, as I reported yesterday, both he and Miller have rejected the company’s request to return the funds.
“Whilst the former executives have so far robustly rejected our request for repayment, the Board firmly believes this should be the right and fair outcome for shareholders and remains committed to pursuing it,” a WANdisco spokesman said in response.
If they maintain their stance, Richards and Miller risk becoming the latest emblems of a problem all-too familiar on the AIM market: lax governance enforced by guidelines which are unduly lenient, and with few reparations for ordinary investors when things go awry.
Let battle commence
Few things have been rarer in corporate Britain in the last 15 years than banking M&A. And few things in banking M&A have been more common in the last 15 years than attempts by the Co-operative Bank to sell itself.
This time, it would appear, it’s serious. An auction process due to kick off next month offers would-be suitors a chance to acquire a distinctive, albeit, sub-scale, consumer banking franchise which can genuinely claim to have put a decade of crisis behind it.
Shawbrook, the SME lender owned by BC Partners and Pollen Street Capital, is first out of the traps.
Shawbrook faces two obstacles: first, the £800m valuation it ascribes to its target (based on a 30% stake that would be handed to Co-operative Bank shareholders) is unlikely to be rich enough for a wily group of investors who include Bain Capital and JC Flowers.
Few things have been rarer in corporate Britain in the last 15 years than banking M&A.
Secondly, it will inevitably have competition. Aldermore Bank, the lender owned by South Africa’s FirstRand, is another logical bidder, as is OneSavings Bank, although the latter’s recent warning that profits would be hit by mortgage customers chasing cheaper deals may have hampered the M&A ambitions of Andy Golding, its widely respected chief executive.
The big high street banks are also expected to look at a bid, although one we can assume will not be the eventual buyer is Barclays, whose investment bankers have signed up to advise Shawbrook.
Let battle commence!
Misfiring strike force
Ping! A hopeful email has been landing in the inboxes of scores of companies in recent weeks, seeking interest in becoming the new shirt sponsor of Chelsea FC.
With the new Premier League season kicking off this weekend, the Blues’ struggle to strike a lucrative new deal is emblematic of the club’s travails since last year’s takeover by Todd Boehly and Clearlake Capital.Now reportedly in talks to raise capital from Ares Management, Chelsea’s sponsorship troubles have included stalled discussions with Paramount (blocked by the Premier League over broadcasting conflict concerns) and Stake (dropped after fans’ groups objected).
The latest email, from sports agency CAA plumbed new depths – at least one recipient of it was a pre-revenue start-up with no consumer-facing audience.
Now reports suggest it may have finally landed a deal with Infinite Athlete, a technology company.
Blues fans will hope its expensive array of striking talent finds it easier to score this season than the club’s commercial department.
Mark Kleinman is Sky News’ City Editor