Lombard

Last updated: March 10, 2014 7:41 pm

Standard can be dandy for debutantes such as Seplat

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments
Deals such as the Nigerian oil group’s float should be applauded

Everyone knows “economy” is cattle class on an airliner and a regular cappuccino from Starbucks would only satisfy the caffeine cravings of Tom Thumb. But could the humdrum standard stock listing be due for reappraisal? The dual float of Nigerian oil group Seplat will feature a plain quote on the London leg of the $1.5bn-$2bn transaction. Five subsidiaries of Hong Kong trading house Jardines meanwhile plan to shed premium listings.

Prestige and lowered costs of capital went hand-in-hand for the foreign companies that sought premium quotes in the past. Shares typically traded at steeper earnings multiple because corporate governance standards were supposedly higher. It helped that a premium listing brought admission to FTSE indices and automatic purchasing by passive funds.

Corporate governance scandals at foreign miners such as Eurasian Natural Resources Corp and Bumi highlighted the weakness of the system. In reaction, FTSE International is excluding companies from its indices if their free float is below 25 per cent. UKLA is toughening its regime too. Majority shareholders who interfere in boardroom decisions could find themselves disenfranchised.

Seplat wants to retain its Nigerian registration. That is appropriate for a group set to benefit from government policies aimed at putting more of the Nigerian oil industry in the hands of Nigerians. But that means seeking a standard London listing. Otherwise it would need to relocate its HQ to the UK or sell more than 50 per cent of its shares.

Some bankers will beat their chests at the parentheses that reform places round the word “Welcome” on the City’s doormat. However, deals such as the Seplat float should instead be applauded. They highlight greater realism among foreign issuers and greater clarity for investors on the governance standards of quoted businesses.

Coy Kapoor

As the new owners of a brand that is a byword for the sexual revolution, Reckitt Benckiser is being remarkably coy about the price it is paying Johnson & Johnson for K-Y Jelly, writes Kate Burgess. Rakesh Kapoor, chief executive, is anything but bashful when explaining graphically his vision for Durex, the condom-maker that is one of RB’s so-called “powerbrands” and will be teamed up with K-Y in its “sexual wellbeing” division.

Analysts can only speculate a price for K-Y of $400m. That would be a snip for RB, which turned over more than £10bn last year. Despite being prescribed as a medical lubricant for ladies since 1917, being sold over the counter since 1980 and having almost as many uses as WD40 (including monster slime on the filmset of Alien, diving suit sealant and hair gel), K-Y’s revenues were about $100m in 2013.

However, it is a yin-yang deal. The K-Y brand, described as having “a very high trust score among women”, is strong in territories where Durex is weak.

The acquisition does not just show a business seeking to get in touch with its feminine side. It underscores Reckitt’s ambitions to grab more high-margin consumer health brands it hopes to transform by aggressive marketing.

The question is always at what cost. Healthcare businesses can command heady multiples. The market’s own sense of wellbeing would be enhanced if it had a tad more information and could be sure that RB won’t get into the habit of overpaying.

Loss of Facebook

Post in haste, repent for ever. The pitfall of social media has claimed Co-op boss Euan Sutherland. He used the Facebook page of the mutual to attack “disaffected people who . . . are determined to make life difficult for the Co-operative at a time when what we need most are professionalism and loyalty”.

What better way to appear paranoid and thin-skinned than to rage publicly against traitors in the ranks? And what better timing to reinforce that subtext than after a newspaper reported leaked information that Mr Sutherland will get remuneration of £3.5m in his first year in office?

Mr Sutherland joined Co-op as a troubleshooter tasked with patching a £1.5bn hole in the capital of Co-op Bank. He is not responsible for that deficiency or the antics of former bank chairman Paul Flowers, the so-called “crystal Methodist”. It would be reasonable for his pay to recognise the career risk of his job.

Customers and members are less likely to acknowledge this now. The rule with sending electronic messages is: if in doubt, don’t. They give casual comments unforgiving permanence. The only “poke” Mr Sutherland currently merits is the kind delivered with a pointy stick.

jonathan.guthrie@ft.com

Reckitt Benckiser: kate.burgess@ft.com

Related Topics

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE