😬 Revolut's UK Cold Shoulder

The UK fintech launched a scathing attack on the UK regulatory environment, HSBC defeated its largest shareholder in a proxy battle to split up the bank and British Airways’ owner IAG returned to profitability.

May 09, 2023

Good morning. In today’s update - Revolut launched an attack on the UK’s business environment, HSBC defeated its largest shareholder in a proxy battle over a potential split of the bank and British Airways returned to profitability.

Markets

London stocks ended the week on strong footing, with the FTSE 100 and FTSE 250 closing +1.0% and +1.1% respectively. Among the sectors driving sentiment were banks, oil giants (who tracked a sharp rise in crude prices), as well as travel stocks who got a boost from an upbeat trading statement by British Airways owner IAG (below).

Top Stories

😳 Revolut attacks UK business environment

In a blow to the government, the British fintech claimed they would look past London for any potential stock market listing and hit out at the UK’s regulatory regime, claiming it is “hard” to do business here. Revolut has been waiting for a banking license from the Bank of England’s PRA for over two years, with CEO Nik Storonksy complaining it “takes months” to get a reply from the regulators. Storonsky also compared the support that tech companies get from the US government, saying in the UK it is “completely the opposite”. Ouch. (The Times)

đŸ„Š  HSBC claimed victory in shareholder battle

Attempts by HSBC’s largest investor to split the bank were foiled at the lender’s annual general meeting, with shareholders voting overwhelmingly against proposals. Ping An - which owns around 8% of shares - wanted HSBC to spin out its Asian business and offer up a guaranteed dividend every year. The proposals proved unpopular - despite under half of HSBC shareholders turning out at the meeting, the special resolutions got only 20% of votes. Chairman Mark Tucker also noted that no other institutional investors voted in favour. (Official)

đŸ›«  British Airways first profit since pandemic

International Consolidated Airlines Group raised its 2023 profit forecasts following “better than expected” demand and lower fuel prices in the first quarter of 2023. The group noted strong demand from both leisure bookings and a recovery in business travel, with operating profit at British Airways turning positive for the first time since the pandemic. IAG now expects 2023 group operating profit to be above €2.3bn. (Official)

IAG shares rose +2.3% on the update, with other travel companies including Carnival (+4.9%), Wizz Air (+3%) and EasyJet (+1.7%) also getting a boost.

What Else Happened?

Economics / Politics / General

The Conservatives suffered a heavy defeat at local elections last week, losing over 1,000 seats and putting Labour in pole position as the largest party in local government.

Activity in the UK’s construction sector showed growth for the third month in a row, driven by commercial work; however, house building suffered its biggest decline for three years. (full report here)

European private equity firms are struggling to exit investments in 2023 - deals between funds hit their lowest level since the pandemic started. (FT)

Deals

Ascend - a UK biotech startup - announced it had raised $130m to acquire smaller cell and gene therapy companies, helping to speed up the process of launching treatments. (FT)

Billionaire Jim Ratcliffe’s £5bn bid for Manchester United has been structured in a way that could force the Glazers to sell their remaining stake by 2026.

BP is reportedly looking to offload a couple of portfolio companies from Launchpad - its early stage venture unit; Lytt and Onyx Insight operate in the data analysis space and are expected to fetch in the “tens of millions” should a sale happen.

FTSE 100 safety equipment and technology conglomerate Halma acquired Polish pipeline repair business, Sewertronics, for €41m (plus €18m in contingent payments). (Official)

Company News / Trading Updates

Holiday Inn owner Intercontinental Hotels Group shares dropped 1.9% after announcing the departure of CEO Keith Barr. (Official)

Luxury car maker Bentley - owned by VW - reported the second best quarterly results in its history, driven by strong foreign sales and demand for the ÂŁ180k Bentayga SUV.

🌎 Global Snapshot

Warren Buffet’s Berkshire Hathaway saw a 12% jump in quarterly operating profits owing to a recovery in its insurance businesses; Berkshire is now sitting on over $130bn of cash.

A slump in dealmaking during Q1 hit private equity giant KKR, as distributable earnings fell 26%. However, it did raise $12bn over the quarter and now sits on $106bn in investor commitments, with the co-CEO’s claiming recent market volatility was creating “opportunity”.

New York-listed beauty brand Coty is eyeing an additional stock market listing in Paris, in order to tap into European beauty investors. (FT)

US payrolls came in hotter than expected yet again, as the world’s largest economy added 253k jobs during April; the latest print adds to inflationary pressures, complicating things for the Fed who signalled they were considering a pause to rate hikes.

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