🎣 London bags another IPO

Good morning. In today’s update - London’s stock market looks set to bag another IPO, housebuilder Crest reported a slump in profits driven by rate hikes, shareholders of building materials giant CRH approved plans to move to the NYSE and the Eurozone slipped into a recession.

Housekeeping note: The Long & Short will be taking a short sabbatical next week, back with you the week after. Enjoy the warm weather!

Markets

• The UK’s main equity indices suffered on Thursday after news of a recession in the Eurozone dragged sentiment lower.

• A number of stocks traded ex-dividend today (the last day of entitlement to a payment) - including Vodafone, Sainsbury and WPP - causing further downward pressure.

Corporate News

FTSE 250 housebuilder Crest reported a slump in profits over the last six months and warned of continued impacts to “demand and confidence” should interest rate hikes continue; pre-tax profits hit £21m over the period, down from £53m the year before. (Link, Crest)

Wizz Air forecasted a swing to profit over the next year, driven by strong bookings demand and operational improvements; the airline reported a net loss of €535m for the year to March as it suffered from an increase in fuel prices, but expects to return to earnings of between €350-400m over the next 12 months. (Link, Wizz)

Increased passenger demand at FirstGroup helped offset negative impacts from recent industrial action, with the travel operator reporting better-than-expected results for the year to March; adjusted profit came in at £82m, compared to a pandemic-affected £36m the previous year. Shares surged 13.9% on the news. (Link, FirstGroup)

M&G said their voluntary redundancy programme received more than the 200 applicants it was hoping for (around 4% of the workforce), whilst looking for further opportunities to “streamline” the business; the FTSE 100 asset manager also reported net asset inflows of £400m for the first quarter of the year (excluding its illiquid heritage portfolio). (Link, M&G)

Deals

The City looks set for another win as CAB Payments announced plans to IPO in London, the second in a week after WE Soda; fintech CAB provides FX and cross-border corporate payment services and is seeking a valuation of between £800m-£1bn+. CEO Bhairav Trivedi said that as a British company, it was “natural” for them to list in London. (Link)

Shareholders of CRH - the world’s largest building materials group - approved plans to move its primary stock market listing from London to New York on Thursday; 95% of investors voted in favour of the move, which is expected to take effect at the end of September. CEO Albert Manifold claimed the firm could now become a “truly American” business. (Link)

Kreos Capital - a London-based provider of venture debt to startups - has been acquired by BlackRock as the asset management giant seeks to push further into the private credit business; Kreos has provided more than €5.2bn in credit across the fintech, cybersecurity and AI sectors, among others. (Link)

In today’s VC update:

• Atoa Payments - a UK-based startup allowing customers to pay for purchases instantly by bank transfer - raised a $6.5m seed round led by Peter Thiel-backed Valar Ventures. (Link)

• Just Climate - a London-based fund investing in growth-stage climate tech startups - closed a $1.5bn fund anchored by Microsoft. (Link)

• About:Energy - a Birmingham university spinout developing battery software - raised a £1.5m seed round. (Link)

Economy / General

Banks across the city are considering their relationships with hedge fund Odey Asset Management, after founder Crispin Odey was accused of covering up sexual abuses dating back 25 years; an FT report alleged that Odey assaulted 13 women, the earliest in 2004. (Link, FT)

Wage data from job search platform Indeed showed wages in the UK continued to surge, despite a slowdown in hiring; the median wage reported on job adverts was 7.2% higher in May than a year before, the fastest pace since 2019. (Link)

🌎 Global Snapshot

The Eurozone slipped marginally into a recession after GDP was revised lower for the last quarter, dragged down by a fall in household consumption; GDP fell 0.1% in the first quarter of 2023, following an identical drop in Q4 of 2022 (a technical recession is defined as two consecutive quarters of negative growth). (Link)

…On the other hand, Japanese economic growth was revised sharply higher for the first quarter, driven by an uptick in private investment; GDP was revised to show annualised growth of 2.7% for Q1, far higher than initial estimates of 1.6%. (Link)

The board of Japanese giant Toshiba has recommend that shareholders accept a $14bn offer from private equity firm Japan Industrial Partners; the board initially said the offer was too low, but after no competing bids were submitted and the market for leveraged loans dried up, decided to approve the deal. (Link)

Cohere bagged a $270m funding round from Nvidia, Oracle and Saleforce, valuing the AI startup at $2.2bn; The company is headed by a former AI research specialist from Google, and positions itself as an independent creator of foundational AI models (unlike OpenAI-Microsoft). (Link)

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