🏛️ Co-op Bank Up For Sale

Co-op Bank’s hedge fund owners consider exit options, PE megafund Carlyle emerged as a potential Manchester United investor and William Hill owner 888’s shares surged after a positive update for markets.

April 17, 2023

Good morning. In today’s update - Co-op Bank’s hedge fund owners consider exit options, PE megafund Carlyle emerged as a potential Manchester United investor and William Hill owner 888 shares surged after a positive update for markets.

Markets

UK equities ended the week on strong footing, despite giving up some of Friday morning’s gains on the back of weaker than expected retail sales from across the pond. The FTSE 100 and FTSE 250 finished +0.4% and +0.9% higher respectively.

Banks were notable gainers on the day (HSBC: +3%, Barclays: +3.2%, Standard Chartered: +4.4%, Lloyds: +0.9%) taking their cue from a punchy Q1 earnings report from US giant JP Morgan.

Top Stories

🏛️ Co-op Bank weighs a potential sale

Co-operative Bank, one of the UK’s biggest mid-market lenders, has hired advisers PJT and Fenchurch Advisory to consider a potential sale of the business. Following the bank’s failed bid for Sainsbury’s mortgage book earlier this year, its owners GoldenTree and BlueMountain Capital are now reviewing strategic options which, alongside a full sale, could also include an IPO or a merger with a rival. Potential suitors include other mid-market banks including OneSavings, Aldermore, Paragon and Shawbrook, according to Reuters.

⚽ Carlyle emerges as a possible Manchester United investor

Private equity heavyweight Carlyle has reportedly thrown its hat in the ring as the sales process for Man United enters a third round of bidding. The US-based fund aren’t thought to be looking for outright ownership of the club, but are one of a number of parties interested in injecting capital and taking a minority stake. Funds Elliot Management and Ares are also reportedly keen to be involved in one way or another.

🎲  888 puts regulatory issues behind them

William Hill owner 888 surged 21% on Friday after announcing EBITDA margins would be “significantly” higher in 2023, as the business targets more sustainable revenue streams. The betting firm reported revenue ($1.85bn) and EBITDA ($311m) in line with market expectations for 2022. Separately, 888 also confirmed they didn’t expect any further impact from the record fine issued by the gambling regulator in January over poor consumer protection and anti-money laundering controls. (Official)

What Else Happened?

Economics / Politics / General

UK nurses rejected the latest 5% pay offer from the government (going against the recommendation of their RCN trade union), and laid out plans for further strikes at the end of April.

Dovish Bank of England policymaker Silvana Tenreyro warned against further rate hikes, arguing past tightening was enough and that we risk getting “burned”; Tenreyro, unsurprisingly, voted against raising rates at the MPC’s meeting last month.

Despite a recent improvement in economic conditions, Lloyds Bank CEO Charlie Nunn still sees the UK entering a “mild” recession later this year.

Deals

The sale of HSBC’s French unit has been put into doubt, as interest rate hikes have caused a surge in the amount of regulatory capital needed to be held by its would-be acquirer My Money Group.

Listed property investment fund Industrials REIT agreed to be acquired by Blackstone, valuing the company’s share capital at £511m. (Official)

In VC land - Little Journey, an app designed to help children prepare for surgery, raised $3.1m led by Octopus Investments; exchange traded fund platform InvestEngine successfully closed a ÂŁ2m crowdfund to support development of additional features to its product; Web3 payment processing startup Helio secured ÂŁ2.6m seed capital to grow its team.

Company News / Trading Updates

Electrical goods retailer AO World saw shares shoot up 11.8% after announcing a positive trading update, saying it expected profits to be at the higher end of its original forecasts due to “positive traction” from cost cutting plans. (Official)

Iconic London-listed boot maker Dr. Martens saw shares jump over 10%, despite posting its second profit warning of the year after further operational issues at its LA warehouse. (Official)

🌎 Global Snapshot

JP Morgan smashed analyst expectations to post record revenues for the first quarter of 2023; revenue surged 25% to $39.3bn, driven by an increase in net interest income (the difference between interest earned and interest paid on deposits). Shares rose 7.6%. (Official)

US retail sales dropped more than economists had forecast in March, in a further sign the world’s largest economy is cooling off.

German group Merck agreed an $11bn acquisition for US-listed Prometheus Biosciences, to accelerate its “growing presence in immunology”; the offer represents a 75% premium to the latest share price.

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