The Notebook: Neil Bennett on strikes, why public markets matter and the Lehman Trilogy
When my old friend James Ashton (former City Editor of the – ahem – Evening Standard) told me a few weeks ago that he had become CEO of the Quoted Companies Alliance, I felt like sending him my St Jude pendant, for the patron saint of lost causes.
For the quoted company sector has been in headlong retreat for more than two decades. In that time the number of companies on the London Stock Exchange’s main market and AIM has fallen by more than a third. Moreover, a significant proportion of the remaining companies on the market are funds, rather than commercial trading businesses.
The problem is starkly highlighted in KPMG’s IPO review which showed the amount raised from IPOs in London in 2022 fell some 93 per cent on the year before to a paltry £1bn.
While I have enormous respect for the world of private equity and everything it has achieved in that same timespan, I am from a generation that believes the public markets matter. A lot.
There is a powerful democracy to the quoted market – everyone can buy a share, engage with the company and its management and are provided with a wealth of information to make their investment. I started my career writing for private investors and one of the most intelligent corporate commentators I met was a retired taxi driver called Walter Geake, who accurately predicted the downfall of the (pre-Lloyds) TSB.
There are many reasons why today’s business creators are deterred from joining the public markets, but the main ones are cost and bureaucracy. It is expensive to maintain a quote and the task of keeping up with the regulatory burden is enormously time-consuming. Something fundamental has to change to reverse the trend.
James has made a good start – pointing out that annual reports have grown in length by 46 per cent in just five years and are now longer on average than George Orwell’s 1984 (appropriately enough), but rather less gripping. But boy does he have his work cut out.
SPAC or SPUT?
On the subject of the IPO dearth, I was interested to see news from my fellow columnist Mark Kleinman over the weekend that the LSE might be about to see its first proper de-SPACing, with a biotech business called Istesso due to reverse into the Hambro Perks shell. It looked at interesting company and the sort of new story we need in this moribund market. But alas no – on Monday both sides said firmly that talks were off.
As it stands the London SPAC market should be renamed the SPUT market, since there has been a lot of talk and very little action. Surely someone in the Square Mile should be able to use it to match entrepreneurialism with capital in the way we have been doing for centuries?
UNIONS COULD BE SIGNING THEIR MEMBERS’ OWN P45s
If you are reading this in the paper, you are one of the lucky ones given that today is once again train strike day. I am an optimist born of experience, however. In the eighties newspapers were wracked by strikes from the print unions – but they helped usher in new technology that transformed the industry for the better.
I hope and trust that the same will happen to rail, and that exasperation with the current situation will give the government and industry the courage to press ahead with automation, leading to a safer, cheaper and far more efficient transport system. If computers can fly satellites, they can certainly operate the 7:10 to Fenchurch Street.
WHY THE HURRY TO GO OFFSHORE?
All the furore over Nadhim Zahawi’s ‘careless’ tax mistake obscured I thought one rather important fact. Britain’s tax laws are already enormously attractive for entrepreneurs, who only have to pay 10% of any gain they make on the sale of some or all of their business. That compares with a top rate of income tax of 45%. Surely 10% is a small price to pay for having everything the UK offers at your disposal when launching a business – such as the rule of law, a talented and committed workforce and an infrastructure that (more or less) works? I doubt that YouGov would have been quite so successful if it had been founded in somewhere more tax-efficient, Gibraltar say.
CAN I QUOTE YOU ON THAT?
The chickens are coming home to roost
Neil Sorahan, Ryanair’s financial director takes a pop at his ailing Scandinavian competition while reporting bumper results and showing that it’s not just his boss Michael O’Leary who can deliver a soundbite.
WELL WORTH SEEING
I was delighted to learn last year that Sam Mendes’ poignant play is making a return to the West End and opened last week. While the collapse of Lehman Brothers in 2008 is now fading into history and memory, the story of the three brothers who founded that financial empire is still a powerful sweep of our shared commercial history. I will certainly be booking some tickets, both to enjoy the play once more and also to do my small bit to support the West End where audiences are still some way off their pre-Covid levels. With tickets from only £20 each, it is well worth a night out.