Hunt calls Dorneywood summit to boost flagging UK stock market
Jeremy Hunt is convening a summit aimed at enticing more companies to London’s stock market amid an accelerating exodus of businesses being picked off by overseas and financial predators.
Sky News has learnt that the Treasury has invited the bosses of some of Britain’s most prominent private companies to attend a meeting next month at Dorneywood, the chancellor’s weekend country residence.
Sources said the day-long event on 16 May would target entrepreneurs behind potential flotation candidates from the fintech and biotech sectors.
Bim Afolami, the City minister, and Lord Petitgas, the prime minister’s chief business adviser, will also be present, alongside key government officials and executives from the London Stock Exchange, the sources added.
In the invitation, a copy of which has been seen by Sky News, the Treasury said attendees and the chancellor would “discuss the UK’s capital markets and how they can support innovative, high-growth companies such as yours to achieve your growth ambitions”.
“The UK’s capital markets play a key role in our economy: driving growth, creating jobs and facilitating investment.
“The government is committed to ensuring that the UK remains the best place for companies to grow, and is already taking forward an ambitious programme of reforms to improve the competitiveness of the UK.”
Dozens of companies, including the likes of digital banks Monzo and Starling Bank, are understood to have been on the invitation list.
The Dorneywood summit has been planned for several months, according to officials, who denied that it was being staged in response to a glut of companies which have announced in recent weeks that they are in receipt of takeover bids or that they would unilaterally delist from the London market.
Chancellor Jeremy Hunt. Pic: PA
Approaches this week for Anglo American, the £30bn mining giant, and Darktrace, the cybersecurity company, have exacerbated the impression of a growing ‘de-equitisation’ of the UK stock market.
Although neither of those deals have yet to be formally agreed, a string of others have, including International Paper’s bid for DS Smith, the FTSE-100 paper and packaging group, which was revealed by Sky News last month.
Other companies which have agreed deals with suitors include Virgin Money, which is set to be bought by Nationwide in a £3bn deal.
Yet more, such as the Royal Mail parent International Distributions Services and the music royalties company Hipgnosis Songs Fund, are in receipt of serious takeover approaches.
While frenetic periods of mergers and acquisitions are far from uncommon, bankers and investors point to a dearth of attractive new opportunities to deploy capital because the flow of initial public offerings has been so slow.
Many of the companies that London would have hoped to attract, including the private equity firm CVC Capital Partners and the chip designer ARM Holdings, opted to list in Amsterdam and New York respectively.
The perception of London’s decline is being heightened by the decisions of boards to move their existing UK listings to other international exchanges, with TUI Travel and Flutter Entertainment, the gambling group behind Paddy Power, among those to relegate their London market presence.
Bosses of companies as large as Shell, the oil behemoth, have also begun to acknowledge publicly their frustration at what they perceive to be a gulf between their intrinsic valuation and that which the public markets are attaching to them.
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Earlier this month, the boss of E-Therapeutics, a fast-growing but loss-making biotech company, described the London stock market as “broken and closed” as he announced plans to delist it and pursue a New York flotation at a future date.
This weekend, one government insider said the Dorneywood meeting would be important because it would highlight to fast-growing British companies that listing overseas “is not all milk and honey”.
A number of the UK-based businesses – such as Arrival, Cazoo and Benevolent AI – which went public in Europe and the US during the now-faded boom for special purpose acquisition companies – have seen their valuations crash, with some subsequently cancelling their listings.
“We need to explain to companies why London’s capital markets are the right place for these businesses to go public,” said one government source.
A Treasury spokesperson said: “The chancellor is meeting with a number of firms to hear their reflections on UK markets and what more the government and regulators can do to support their growth.”
Ryanair has reported another year of record profits and passenger numbers.
The average fare at the airline, which is Europe’s largest by passenger numbers, was 21% more expensive than 12 months earlier, its annual results showed.
But the company suggested a cut in ticket prices could be on the way after this summer when prices will either be the same or more expensive than last year.
Annual profits reached €1.92bn (£1.64bn), surpassing the previous record of €1.45bn (£1.26bn) made in the year ending March 2018.
Passenger numbers also outpaced previous all-time highs and are now well above pre-pandemic numbers at 184 million – a rise of 23% on the pre-COVID year of 2019.
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Ticket prices
Those passengers paid fares costing an average of 21% more than the year up to March 2023 but Ryanair’s chief executive Michael O’Leary said if the company has to cut fares to have planes 94% full next April, May and June “then so be it”.
While demand is “strong” for summer flights and its summer schedule will operate over 200 new routes, the low-cost carrier said it remained “cautiously optimistic that peak summer 2024 fares will be flat to modestly ahead of last summer”.
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Boeing headwinds
The passenger increase has come despite Boeing‘s delays in delivering new planes to the airline.
Ryanair had staked a large part of its financial success on expansion through 300 new 737 MAX 10 aircraft.
But the plane manufacturer has been beset by delays amid regulatory and media scrutiny of safety at its manufacturing sites after a door blew off an Alaska Airlines Boeing 737 MAX 9 jet.
There’s a risk those delays “could slip further”, Mr O’Leary said.
But Ryanair said it would receive “modest compensation” from Boeing for the delays.
The no-frills carrier also said its fuel bill rose 32% to €5.14bn (£4.4bn).
Billionaire Sir Jim Ratcliffe has told Sky News that Britain is ready for a change of government after scolding the Conservatives over their handling of the economy and immigration after Brexit.
While insisting his petrochemicals conglomerate INEOS is apolitical, Sir Jim backed Brexit and spent last weekend with Labour leader Sir Keir Starmer at Manchester United – the football club he now runs as minority owner.
“I’m sure Keir will do a very good job at running the country – I have no questions about that,” Sir Jim said in an exclusive interview.
“There’s no question that the Conservatives have had a good run,” he added. “I think most of the country probably feels it’s time for a change. And I sort of get that, really.”
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Sir Jim was a prominent backer of leaving the European Union in the 2016 referendum but now has issues with how Brexit was delivered by Tory prime ministers.
“Brexit sort of unfortunately didn’t turn out as people anticipated because… Brexit was largely about immigration,” Sir Jim said.
“That was the biggest component of that vote. People were getting fed up with the influx of the city of Southampton coming in every year. I think last year it was two times Southampton.
“I mean, no small island like the UK could cope with vast numbers of people coming into the UK.
“I mean, it just overburdens the National Health Service, the traffic service, the police, everybody.
“The country was designed for 55 or 60 million people and we’ve got 70 million people and all the services break down as a consequence.
“That’s what Brexit was all about and nobody’s implemented that. They just keep talking about it. But nothing’s been done, which is why I think we’ll finish up with the change of government.”
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UK needs to get ‘sharper on the business front’
Prime Minister Rishi Sunak has indicated an election is due this year but Monaco-based Sir Jim is unimpressed by the Conservatives’ handling of the economy.
“The UK does need to get a bit sharper on the business front,” he said. “I think the biggest objective for the government is to create growth in the economy.
“There’s two parts of the economy, there’s the services side of the economy and there’s the manufacturing side. And the manufacturing, unfortunately, has been sliding away now for the last 25 years.
“We were very similar in scale to Germany probably 25 years ago.
“But today we’re just a fraction of where Germany is and I think that isn’t healthy for the British economy… particularly when you think the north of England is very manufacturing based, and that talks to things like energy competitiveness, it talks to things like, why do you put an immensely high tax on the North Sea?
“That just disincentivises people from finding hydrocarbons in the North Sea, in energy.
“And what we need is competitive energy. So I mean, in America, in the energy world, in the oil and gas world, they just apply a corporation tax to the oil and gas companies, which is about 30%. And in the UK we’ve got this tax of 75% because we want to kill off the oil and gas companies.
“But if we don’t have competitive energy, we’re not going to have a healthy manufacturing industry. And that just makes no sense to me at all. No.”
‘We’re apolitical’
Asked about INEOS donating to Labour, Sir Jim replied: “We’re apolitical, INEOS.
“We just want a successful manufacturing sector in the UK and we’ve talked to the government about that. It’s pretty clear about our views.”
Sir Jim was keener to talk about the economy and politics than his role at struggling Manchester United, which he bought a 27.7% stake in from the American Glazer family in February – giving him an even higher business profile.
Old Trafford stadium in Manchester. Pic: AP
Push for stadium of the North
He is continuing to push for public funds to regenerate Old Trafford and the surrounding areas despite no apparent political support being forthcoming. Sir Keir was hosted at the stadium for a Premier League match last weekend just as heavy rain exposed the fragility of the ageing venue.
“There’s a very good case, in my view, for having a stadium of the North, which would serve the northern part of the country in that arena of football,” Sir Jim said. “If you look at the number of Champions League the North West has won, it’s 10. London has won two.
“And yet everybody from the North has to get down to London to watch a big football match. And there should be one [a large stadium] in the North, in my view.
“But it’s also important for the southern side of Manchester, you know, to regenerate.
“It’s the sort of second capital of the country where the Industrial Revolution began.
“But if you have a regeneration project, you need a nucleus or a regeneration project and having that world-class stadium there, I think would provide the impetus to regenerate that region.”
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