Don’t sell Britain short
YOU have to think that a warning about sterling’s vulnerability to further falls, from a prominent hedge fund manager, is not an accident. By allowing the message to appear in the public prints, Tory donor Chris Rokos is willing something to happen.
Why otherwise would he share his views beyond a small cluster of clients affording everyone else a trading opportunity?
The founder of Rokos Capital Management is not the only person deprecating Britain’s prospects. Deputy governor of the Bank of England Dave Ramsden, a former Treasury mandarin, suggested this week that the UK still had work to do to restore its reputation in the aftermath of mini-Budget mayhem.
one wonders what he has in mind. After all, Jeremy Hunt has not only abandoned almost all of the Truss-Kwarteng tax cuts but donned a hair shirt and delivered a revenue-raising budget which will push millions of ordinary citizens into higher tax brackets. In fact, North Sea investors are reconsidering investment in the UK after the Government hammered the sector with a higher and extended windfall tax.
Britain is the only advanced country which thinks it is sound policy to tighten fiscal and monetary policy at the same time as heading into recession. The UK’s most garlanded economist John Maynard Keynes, who preferred support for demand in hard times, would not have approved.
What is odd about the Rokos intervention is that it fails to recognise that the pound is now $1.21 from its low of $1.03 since Hunt became Chancellor. Furthermore, a competitive pound, since the start of the year, helps to revive inward investment.
Schneider’s bid for the minority in software group Aveva and the German swoop on sausage skin champion Devro are examples. There is more. Comcast-owned Sky this week opened a new innovation centre on its campus in osterley, London, reflecting the current buoyancy of British creativity and film making.
Reputational damage is in the eye of the beholder.
Food waste
THE £667m bid for Lanarkshire sausage skin maker Devro by secretive German group Saria gives reason for pause.
As might be expected with a premium of 65pc on Thursday’s share price, the board, chaired by Steve Good, has bitten off the hand of the bidder. Good points out that the offer is 92pc higher than when the company was first approached.
That raises questions as to why the shares rose strongly before the offer was revealed. There are other reasons for scrutinising the transaction closely. It is a blow to the Scottish government in that there are precious few quoted companies north of the border.
As with the Clayton, Dubilier & Rice purchase of Morrisons, the public-to-private sale of companies, which play an important part in the UK’s food supply chain, threatens Britain’s food security.
Germany may appear a natural home for a sausage skin pioneer but there is far too little known about the secretive billionaire Rethmann family behind the bidder. The history on the controlling group’s website is sketchy on the 1940s experience. There is much twaddle in the offer document about strategic plans and a vague pledge about no material reduction in headcount. How useful that will prove when Devro is out of public sight and mind is difficult to gauge.
Devro follows UK food producer Dairy Crest, bought by rival Muller back in 2014, into German hands. Britain’s free and easy capital markets and low share valuations make tasty fodder for overseas predators.
Pyrrhic victory
SCHNEIDER has overcome sniping from dissident investors and won its fight to take full control of £10bn Cambridge industrial software champion Aveva. Fund managers always find it hard to resist cash buyouts.
But there are much bigger issues at stake. Aveva joins Arm Holdings in uncertain overseas ownership, with intellectual property, built on the UK’s great research universities passed to overseas predators.
At Aveva, similarly to Arm, there is a danger of vital Western tech leaking to China.
Foreign takeovers also see headquarter functions undermined, create uncertainties for colleagues and often see the nation’s corporation tax base eroded.
What a great chance for latest Business Secretary Grant Shapps to ripple his muscles and order full scrutiny, under the Government’s new security powers.