- Semiconductor shortage continues to hit car sales, but the electric vehicle market is growing
- Goldman Sachs prepares alternative investment vehicle Petershill Partners for a London listing amid private equity boom
European markets open brightly
European stock markets edged higher this morning towards the top of recent ranges at the start of what’s set to be a fairly quiet day as US markets are shut for the Labor Day holiday. Investors are still digesting the huge jobs report miss last Friday and what it means for the Federal Reserve’s plans to scale back its bond purchases. Stocks just about fell and the dollar was weaker in the wake of the report, whilst gold rallied. It was far from a straight line down for stocks though as large cap growth and tech helped the Nasdaq Composite to rally 0.21 per cent whilst the Dow Jones fell by the same amount.
This morning the main indices are heading higher by around half of one percent. The euro is lower against the dollar as the latter catches some bid in early trade. Data from Germany has been mixed, with factory orders +3.4 per cent vs -0.7 per cent expected, while the construction PMI slipped deeper into contraction territory at 44.6, a three-month low.
Stagflation: Friday’s US jobs report was bad, indicating growth rolling over and delta taking its toll on the reopening of the economy. With revisions to the last two months the net add was not as bad as the headline print, but it was nevertheless a poor signal for the US economy at this stage. Of note, employment in leisure and hospitality was unchanged, after increasing by an average of 350,000 per month over the prior 6 months.
Neil Wilson is chief market analyst at Markets.com
Car sales stall again
UK car sales registered another weak month in August as supply chain issues continue to dog the industry. According to the Society of Motor Manufacturers and Traders (SMMT) new car sales dipped by 22 per cent in August to 68,033 units compared to the same month last year and the weakest August performance since 2013. While August last year may have been boosted by the exit from the first covid-related lockdown in the UK, this year’s weak performance continues a trend set in July when new car sales slumped by 30 per cent against 2020.
The auto industry is struggling with constrained supply of semiconductors which are vital in the production of the modern motor car. In recent weeks the likes of Volvo, Toyota and Volkswagen have all warned that their production in the second half of the year is likely to be lower due to supply chain issues.
A key indicator for the auto industry in the UK will come next month when the latest registration plate update happens, traditionally a strong month for sales.
Meanwhile, research from NewAutoMotive out today suggests that sales of electric cars overtook diesel cars for the first time on a monthly basis in August with 11 per cent of cars sold being all electric. A further 27 per cent of cars sold were hybrid with just 10 per cent being diesel. GD
Goldman to float Petershill arm
Clearly, the success of Bridgepoint Group’s (BPT) initial public offering hasn’t gone unnoticed.
The UK mid-tier private equity firm saw its share price jump more than 60 per cent shortly after it listed in July, amid a flurry of PE-led takeover approaches for public companies and breathless commentary on the near-term outlook for private sponsor work.
Less than two months on, Goldman Sachs has announced plans to list its alternative asset management arm Petershill Partners in London, in a deal that could be a watershed moment for listed private equity vehicles.
The IPO will seek to raise proceeds of around $750m, as part of a premium listing on LSE’s Main Market.
Petershill was founded in 2007 by the US investment bank’s asset management arm, as the first minority stake acquirer in private equity firms. This means that, unlike Bridgepoint, Petershill generates its income from the fees and capital gains of 19 separate investment teams which together manage a combined $187bn in assets.
All but one of the investments – London-based Pelham Capital – are headquartered in the US.
The group’s profits from these stakes have been growing at a clip in recent years, with so-called partner distributable earnings hitting $310m in the 12 months to June, from $108m in 2018.
So why list? Beyond the apparent charitable offer for shareholders to participate in a sector expected to grow by double digits until 2025, Petershill plans to reduce leverage and spend between $100m and $300m a year to acquire further stakes in PE firms. AN
Read more: What private equity wants
Schroders misses out on ESG kitemark
The still-nascent world of sustainable investing standards has led to a raft of sometimes fuzzy accreditations and overblown claims.
Large money managers are nevertheless keen to trumpet their ESG credentials given half a chance, which is why some heads will have been turned today following the Financial Reporting Council’s (FRC) publication of its list of successful signatories to the UK Stewardship Code, a kitemark for “high standards of stewardship for those investing money on behalf of UK savers and pensioners”.
One notable absentee from the list is FTSE 100 constituent Schroders (SDR), which at last count manages more than £700bn of investments.
The FRC praised the efforts of the 189 applicants to the Code for “better integrating stewardship, and ESG factors into their investment decision-making, reporting on asset classes other than listed equity and identifying the outcomes of their efforts”.
Two-thirds of applicants made the cut, including fellow money management behemoths Abrdn, M&G, L&G and Fidelity, while unsuccessful applicants only have until the end of next month to reapply.
Schroders’ failure to land what is billed by the FRC as “a best-practice benchmark in investment stewardship” is undoubtedly a PR blow for the City firm, whose ‘Beyond Profit’ campaign claims to focus on investments that make a positive impact on the world.
However, the market brushed the matter aside, bidding up the group’s shares by 1 per cent. AN
Read more: Schroders gets pandemic boost