Polman plan on the ropes

LEGAL & General rarely reveals its voting intentions on major corporate events. Indeed, L&G Investment Management (LGIM) was among the last to vote on predator Melrose’s £8bn bid for engineer GKN and is widely credited with providing the shares needed for victory.

It is a big blow to Unilever’s plan to unify its share quotation in Rotterdam that Legal & General has come out against it.

The head of corporate governance at LGIM, Sacha Sadan, says the decision to go early is the result of ‘significant client enquiries’.

In other words, many investors, including pension funds which would be excluded by mandates from holding shares outside the FTSE 100, don’t want to lose Britain’s thirdlargest company from the index.

There is now almost a full house of UK-based long funds – including Aviva, M&G Investments, Columbia Threadneedle and Lindsell Train – publicly opposing the scheme.

One of the few hold- outs is Aberdeen Standard Life, although some of its leading lights are thought to be sceptical.

It is more than a little odd that with the battle raging in the UK, and private investors increasingly engaged, that the critical figure in the whole process, chief executive Paul Polman, has been absent from the City. Chairman Marijn Dekkers and the finance director have been doing the talking – and singularly failed to impress.

Polman has been on the fringes of the United Nations in New York tweeting about almost everything from climate change to poverty in Africa, leaving behind what is the most defining vote in Unilever’s history.

Polman supports a laudatory social governance agenda but his absence might remind critics of other executives, such as former BP chief executive Tony Hayward, who was yachting on the Solent while oil from the Deepwater Horizon was pouring into the Gulf of Mexico.

Unilever says it has had intense engagement with big battalion investors. The dialogue has been hugely unpersuasive for UK funds. Just to add to the muddle there has been a woeful failure to properly and simply address the voting rights of private investors holding their shares on platforms such as Hargreaves Lansdown. That makes a mockery of shareholder democracy.

Italian job

THE populist Italian government headed by Giuseppe Conte could have reason to be grateful to Theresa May and Brexit.

Brussels has its hands full making life as difficult as possible for one state leaving the EU without battling with another.

Italy’s new budget, which plans for a deficit of 2.4pc of output, might not look a problem. It falls within the 3pc deficit guidance for the eurozone.

The difficulty is that populist politics have won out over the determination in Brussels that Italy places itself on a path which brings down the deficit year by year.

Italy’s debt-to-GDP ratio, at 130pc, is at emergency levels, and the argument that it doesn’t matter, because Italian citizens don’t mind holding government debt, is wearing thin.

Italy also has been the biggest recipient of short-term monetary assistance from the European Central Bank, much to the chagrin of German paymasters. The Italian budget settlement, greeted as a great victory for the Right-wing Five Star Movement, is a threat to Brussels-imposed austerity.

By the standards of the euro crisis, the surge in bond yields may not look that desperate. But at 3.23pc the yield on ten-year Italian bonds signals trouble. It was enough to send yields on Spanish and Portuguese bonds higher and knock down the euro.

The austerity imposed on Greece, and which has produced a backlash in the UK, is politically out of fashion.

Within the eurozone, the forces of monetary and fiscal discipline, driven by Frankfurt, are coming up against increasingly noisy anti- establishment forces and the markets are jittery.

Circle line

ENTHUSIASM for shares in peer-to-peer online lender Funding Circle quickly faded when it made its debut on the London Stock Exchange.

Nevertheless it raised some £440m of new money, much of which it intends to use in extending its reach in North America.

Britain is the favoured location for financial technology start-ups, and the LSE is looking to Funding Circle to blaze the trail for more floats.

As likely, they will be snapped up by Silicon Valley giants or established banks seeking to enhance lacklustre digital skills. Pity.