UK plc waves goodbye
ONE of the crazy assumptions behind Labour’s nationalisation and smash-and-grab proposals for British business is the idea that executives and investors will willingly submit to Jeremy Corbyn’s agenda.
Data from the Office for National Statistics shows 53.7pc of London-quoted shares are held by overseas investors.
They are going to be none too happy with the prospect of a sharp rise in corporation tax, public ownership or the idea that some £300bn of value could vanish into trust funds held for the benefit of employees.
In the new global economy, corporations and financial groups have become more mobile. Weekend reports revealed that two of the utilities in Labour’s crosshairs for nationalisation, National Grid and SSE, have taken preventative measures.
The generator SSE shifted its UK networks into a Swiss holding company. National Grid has transferred domicile of parts of the enterprise to Luxembourg and Hong Kong. Under criticism from the regulator, several water companies have been under pressure to bring their tax and borrowing domicile back to the UK. But who could blame them for engaging reverse gear?
FTSE100 corporate brokers have been working with clients on de-risking strategies including change of home. If Unilever were to reconsider the shift to Rotterdam now, it would be far easier to deflect the opposition of UK long holders.
Just how easy it is for financial groups to shift out of London is illustrated by fund management. Allianz Global Investors, which manages £476bn of assets from London, has replaced its City-based CEO with someone based in Munich.
Axa Investment Managers has shifted from the City to a Paris-based CEO. And DWS, fund management arm of Deutsche Bank with £643bn of assets, has installed a new CEO in Frankfurt.
Most of this pre-dates Labour’s manifesto assault on business and is Brexit-related.
Moreover, because the CEO has moved and more secure ‘passport’ arrangements have been put in place, it doesn’t mean that the guts of the enterprises goes with them.
What it does illustrate is that when it comes to looking after the best interests of owners, employees and client funds, City firms have little hesitation before moving away. Simply slapping on capital controls will not stop FTSE100 enterprises or financial firms from moving overseas to avoid threats to ownership arrangements, punishing corporate taxes and the vulnerability of executives to being clobbered by HMRC.
Potential damage to the UK and its tax base doesn’t bear thinking about.
Brand new
THE task for Alan Jope at Unilever is to keep migrating the Anglo-Dutch group away from slower growth older brands in advanced country markets to trendier, greener brands. It does not want to be entirely reliant on the conquest of fastexpanding developing countries. Questions have been raised as to whether its emblematic PG Tips and Lipton black tea brands are core to what Unilever does.
Certainly, judging from the shelves of Waitrose and elsewhere, organic herbal brands such as Pukka, bought by Unilever in 2017, are the rage. That doesn’t mean that Unilever cannot stretch Lipton – in the way that ABF has done with Tetley – to offer more variety. Searching for new global brands is what fast-moving consumer goods companies are all about.
Unilever has prospered by focusing on quality, organic and niche acquisitions with the potential for scaling up. Ben & Jerry’s is an example of this. Unilever has also popped up as a bidder for Coty’s hair salon brands such as Clairol and Wella which come with a hefty price tag of more than £5bn.
There are suggestions that these brands aren’t posh or organic enough for Unilever, but they could well sit alongside Dove in developing countries, expand distribution in advanced countries and move up the value tree. That’s what marketing is all about.
Smart ticket
ONLINE event ticketing trading site Viagogo reminds me of online gambling in its early days. Beset by regulatory challenge, especially in the US, online gaming firm GVC eventually emerged as a champion, gobbling up establishment betting giant Ladbrokes Coral. Viagogo founder Eric Baker sold his American lookalike Stubhub to Ebay for £239m in 2007. Now it has agreed to buy it back for ten times that price.
Regulatory and legal probes do not appear to bother backers including venture capital outfit Angel Capital and high-tech entrepreneur Brent Hoberman a jot.