⏰ London's sleepy IPO market awoken

Good morning. In today’s update - London’s sleepy IPO markets were awoken by a $7.5bn listing from WE Soda, Ladbrokes' owner Entain is in trouble with HMRC, Monzo reported a jump in income for 2022 and a slump in Chinese factory activity has markets worried.

Markets

• Weak economic data from China (below) put London’s markets on the back foot in the morning, with investors struggling to maintain any momentum throughout the day

  • The FTSE 100 and FTSE 250 lost 1% and 0.4% respectively

• Ocado managed to cling on to its FTSE 100 status - the firm narrowly pipped British Land, which was relegated to the FTSE 250 after the quarterly reshuffling.

• Aston Martin jumped 9.6% after the company confirmed that chairman Lawrence Stroll had completed the (previously announced) sale of £120m of shares to Chinese car firm Geely

Corporate News

Shares in Ladbrokes owner Entain dropped 4% following an announcement that it will likely be on the hook for a “substantial financial penalty”, after an investigation into its former Turkish subsidiary by the HMRC; the case relates to potential bribery in the business (which it sold in 2017), with the company acknowledging that misconduct “may have occurred”. (Link, Entain)

Digital bank Monzo reported an almost doubling in its net operating income for 2022, driven by a surge in lending activity; net interest income (the difference between interest received and interest paid out to depositors) jumped by nearly 400% to £164m, driving an overall increase in net operating income to £215m. On the downside - credit losses swelled ten-fold as Monzo set aside more funds to cover expected loan defaults. (Link, Monzo)

Affordable retailer B&M saw shares jump 8% after the group reported a solid set of earnings for the year to March, with sales up 7% and operating cash flows up 45% thanks to inventory reduction; CEO Alejandro Russo said the business benefitted from a “relentless focus” on value and price, with customers trading down from higher-end options. (Link, B&M)

Harry Potter publisher Bloomsbury said it benefitted from a “cut back” in more expensive forms of entertainment, reporting 15% growth in revenues to a record £264m, with profits also jumping 15% (to £25m); Bloomsbury said it outperformed the wider market - which grew by 4% - with CEO Nigel Newton attributing this to their strategy of publishing for both consumers and academics (“unusual in our industry”). (Link, Bloomsbury)

FTSE 100 insurer Prudential announced that its CFO, James Turner, would be leaving the company after an internal conduct investigation relating to a “recent recruitment situation” - Ben Bulmer, currently CFO of the Insurance and Asset Management unit, will take over; shares dropped 6%. (Link, Pru)

FTSE 250 renewable power company Drax slumped 6.2%, after the UK energy watchdog Ofgem announced it would be opening an investigation about whether it has breached annual reporting rules relating to its Renewable Obligation Scheme. (Link)

Deals

In a boost to London’s sleepy IPO markets, WE Soda - the world’s largest producer of natural soda ash used in glass manufacturing - announced its intentions for a $7.5bn listing on the LSE; the company is owned by Ciner Group - an industrials and media conglomerate controlled by billionaire Turgay Ciner - who said they also evaluated New York, but chose London because of its receptiveness to industrials and extractive businesses. (Link)

Lansdowne Partners - a London-based investment group overseeing around $7bn in assets - has agreed to buy CRUX Asset management for an undisclosed sum; CRUX founder Richard Pease will step down following the acquisition, saying there was “no better home” for employees than Lansdowne. (Link)

£2.7bn in carried interest (around 80% of the total amount) was shared between just 255 private equity partners in the UK during the 2020-21 tax year. (FT)

Today’s VC update:

• NomuPay - an Ireland-based cross-border payments platform - raised $54m in funding from Finch Capital and Outpost Ventures. (Link)

• Weev - a Belfast-based EV charging point start up - scored £50m from Octopus Investments to fund the expansion of thousands of charging stations across Northern Ireland. (Link)

Economy / General

Lloyds Bank’s monthly UK business sentiment survey showed a fall in confidence for the first time in three months, as recent optimism over the resilience of the UK economy and trading prospects faded. (Link, Lloyds)

Rampant food inflation is pushing UK shoppers towards own-brand supermarket labels at breakneck speed; sales of own-brand items have grown by double the speed of branded labels in 2023. (Link)

🌎 Global Snapshot

In a worrying sign for the global economy, Chinese factory activity fell faster than expected in May amid weakening demand, with the manufacturing PMI falling to a five-month low of 48.8 (below 50 signals contraction); activity in the service sector remained in expansion (with a reading of 54.5), although this also slowed from the previous month. (Link)

Global asset manager Franklin Templeton agreed to buy Putnam Investments - an active manager with $136bn in assets - from Great-West Lifeco for $925m, plus $375m in contingent consideration linked to performance; the deal is part of a strategic partnership between the two, which will see Great-West allocate $25bn to Franklin Templeton funds over the next 12 months. (Link, Franklin)

Echoing Spain from the previous day, Germany reported a larger-than-expected drop in inflation on Wednesday, suggesting interest rate hikes are starting to filter through; consumer prices rose 6.3% for the year to May, lower than the 6.8% economists had expected. (Link)

Hedge fund titan Bill Ackman is backing JP Morgan CEO Jamie Dimon to run for president, after the latter suggested he would consider public office after leaving banking. (BBG)

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