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It is a measure of how far MFI has fallen that it may have to hand over more than £125m to Merchant Equity Partners after the private equity group this morning agreed to buy its retail business for £1. Just over £50m of that includes advance payments by customers for their orders, but that still leaves about £75m. Even so, MFI shares are up 6 per cent today: some analysts had assumed the disposal would cost MFI £150m. MFI will now concentrate on its profitable Howden Joinery business.
We have interim figures from New Star Asset Management, John Duffield’s outfit, but we’re not sure they’re quite as good as they look at first glance. We’ll have a better idea about that later. The company says funds under management rose 7 per cent to £18bn in the first half, with the group’s Property Unit Trust proving its biggest-selling fund in the UK. UBS analyst Alastair Ryan made an interesting point in his early morning note. “The group’s move to IFRS accounting has reduced reported earnings by £2.6m or 8%. This is primarily attributed to the deferring of upfront fees on sale of investment products,” he wrote. “The implementation of this standard has a disproportionately negative affect on higher growth companies. It remains a risk that investors do not adjust for this timing issue.”
Stagecoach seems to have paid a high price to retain the right to run South Western, the country’s largest commuter rail franchise. It will pay the government £1.19bn for the right to run the routes for 10 years beginning February 2007. The group said the deal was expected to bring in more than £530m a year in revenues and up to £20m in operating profits. Its shares are off about 3 per cent.
We’ll do more today on Sir Richard Branson’s decision to invest $3bn in measures to tackle climate change. This isn’t charity; it’s venture capital. And for that reason it’s interesting to look more closely at where the funds will come from and what return Branson might expect to earn on them in his new venture, Virgin Fuels.
I could read a lot more, too, on the founders of the Dunelm home furnishings group, who are set to land £120m when the business floats next month. Philip Stafford is going to tell us what more he can about the Adderleys and how they built up this business from a stall in Leicester market.
Cape, an engineering services firm which today reported strong interim results, is pumping £40m into a new fund to cover future asbestos claims.
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