IMF caution
Leaving the European Union without a deal would bring about a UK recession and have seven times the negative impact on the UK economy compared with the EU, according to modelling conducted by the International Monetary Fund (IMF). At the time of writing, European leaders had yet to sign off an extension to the Article 50 process that would avert a no-deal Brexit on 12 April. No deal would cause contractions in 2019 and 2020, and would overall hit UK gross domestic product (GDP) by about 3.5 per cent to 2021, compared with a soft Brexit as envisaged by the IMF.
Stagecoach hamstrung
Pension dispute
The Department for Transport (DfT) disqualified Stagecoach (SGC) from the three rail franchises it has bid to operate – South Eastern, East Midlands and the West Coast Partnership as a joint venture with Virgin Group and SNCF. An official from the DfT said that Stagecoach’s bids were “non-compliant” with respect to pensions risk, where bidders were asked to bear full long-term funding risk on relevant sections of the Railways Pension Scheme. Stagecoach chief executive Martin Griffiths said the company’s bid was “consistent with industry guidance” and that he believes that the private sector “should not be expected to accept material risks it cannot control and manage”.
ECB dovish
Rates held
The European Central Bank (ECB) kept interest rates at record lows, after cutting its growth forecast for 2019 by 0.6 percentage points to 1.1 per cent. The ECB left the benchmark refinancing rate at zero and the deposit rate at -0.4 per cent and said it expected to keep official borrowing costs for the bloc on hold at least through to the end of the year. The governing council also said it planned to reinvest bonds maturing under its quantitative easing programme “for an extended period of time past the date when it starts raising the key ECB interest rates”.
StanChart settles
Penalty provisions
Standard Chartered (STAN) agreed to pay an aggregate $1.05bn (£0.8bn) in penalties to the US authorities – including the Department of Justice and the Office of the District Attorney for New York County – and the Financial Conduct Authority to resolve investigations in relation to alleged violations of US sanctions against Iran. The lender had already taken a $900m provision for the matter during the fourth quarter of 2018 and will take a further $190m charge during the first quarter of this year. Those charges come seven years after the emerging markets-focused banking group paid a $667m fine and signed a deferred prosecution agreement with US prosecutors to avoid criminal charges for the alleged sanctions breach.
G4S rallies
Canadians' target
Less than a month after G4S (GFS) said it had received unsolicited approaches from buyers interested in its cash solutions business. Canadian security group Gardaworld confirmed it was considering approaching the board with a cash offer for the entire group, sending shares in G4S up 17 per cent in response. Under the takeover code, Gardaworld now has until 8 May to announce a firm intention to make an offer, or else to announce its intention to withdraw. At the time of going to press, G4S declined to comment on the announcement.
Risers and fallers (%)
| JTC | +25.67 |
| AMIGO | +24.33 |
| RENEWI | +19.57 |
| CHARLES TAYLOR | +19.5 |
| HOSTELWORLD | +17.91 |
| SAGA | -45.3 |
| FUNDING CIRCLE | -15.31 |
| VP | -14.91 |
| STAGECOACH | -13.89 |
| MITIE | -13.14 |
Week to 9 April 2019
Hot money
Payment IPOs
Finablr – the UAE-based payments and foreign exchange specialist that owns Travelex – announced its potential intention to float on the London Stock Exchange, after its registration document was approved by the Financial Conduct Authority. The company processed more than 150m transactions in 2018. Its potential flotation would see gross proceeds of $200m raised via the issue of new shares, and an offer of existing shares to be sold by certain current shareholders. Meanwhile, payments group Network International’s (NETW) London IPO has been priced at 435p a share. Unconditional dealings in the shares are expected to start on 15 April.
Ashley land grab
Findel takeover extended
Online retailer Findel (FDL) revealed that a takeover offer from its largest shareholder, Sports Direct (SPD), had failed to secure the necessary support from remaining investors. According to the Findel board, only 37.82 per cent of shareholders have voiced their support for the 161p-a-share offer. Regardless, Sports Direct has chosen to extend the offer until 1pm on 24 April 2019 at the same price. It also has until 4 May 2019 to improve or otherwise change its offer and until 18 May 2019 to achieve sufficient acceptances.
