LONDON MARKET PRE-OPEN: Schroders buys stake in Greencoat Capital

Tue, 21st Dec 2021 07:47

(Alliance News) - Stock prices in London are seen opening higher on Tuesday following a modest relief rally in Asian equity markets, though investors remain mindful of the Omicron variant and government moves to contain its spread over the festive period.

In early company news, asset manager Schroders bought a stake in a renewable infrastructure investment manager. Casino operator Rank Group poached its new finance chief from estate agent Foxtons.

IG futures indicate the FTSE 100 index is to open 82.67 points higher at 7,280.70. The blue-chip index closed down 71.89 points, or 1.0%, at 7,198.03 on Monday.

Schroders confirmed it reached agreement to acquire a 75% shareholding in Greencoat Capital Holdings for an initial GBP358 million.

Last week, Schroders had said that it was in advanced talks with Greencoat Capital LLP to buy a significant stake in the business.

The London-based money manager highlighted that Greencoat is one of Europe's largest renewable infrastructure managers, with GBP6.7 billion of assets under management at November 30.

Schroders said the deal includes a potential earn out, payable three years after completion, which is subject to stretch revenue targets and the continued employment of the senior management team in the Greencoat business. It is capped at GBP120 million. The purchase price will be settled in cash.

Schroders explained: "Providing private capital for the energy transition required to achieve a net zero future will become increasingly important as governments around the world look to accelerate towards this goal. This is an area where we can support one of the most significant transformations required in economies worldwide to mitigate climate change. In addition, there is strong investor demand for such long-duration assets providing long-term secure income streams."

Miner BHP Group said it has received full regulatory approval for corporate structure unification under its existing Australian parent company, BHP Group Ltd. Shareholder votes will be held on January 20, and the unification is expected to complete on January 31. The unified company will have its primary listing in Sydney, rather than London.

Rank Group said it has appointed Richard Harris as chief financial officer and board director, with effect from May 1. Harris will join Rank from estate agent Foxtons, where he has been CFO June 2019. He previously spent 11 years at retailer Marks & Spencer in a number of senior finance roles.

In response, Foxtons said it has promoted Chris Hough to CFO and executive director. Hough currently is director of finance and company secretary, having joined Foxtons in May 2019. Harris will remain with Foxtons until April to ensure an orderly handover to Hough, Foxtons said.

The Irish government said it intends to sell part of the state's 71% stake in AIB Group through a trading plan managed by Merrill Lynch International.

Minister for Finance Paschal Donohoe has instructed the US bank to target a sale of up to, but no more than, 15% of the expected aggregate total trading volume in shares of AIB.

In response, AIB welcomed the state's intention to further sell part of its shareholding in the company.

AIB Chief Executive Officer Colin Hunt said: "AIB owes the Irish taxpayer an immense debt of gratitude for its support during the financial crisis. The group's robust balance sheet, its digital capability and the scale of its operations means it will continue to play a key role in supporting the Irish economy and our customers. The focus of our strategy is to grow and strengthen the group to ensure we continue generating sustainable returns for all our shareholders."

Calls for a higher market open in London come against a backdrop of concerns against the fast-spreading Omicron variant.

The Netherlands has imposed a lockdown over the holiday period, Germany has tightened restrictions notably affecting the unvaccinated, and concerns mount over possible tougher UK curbs.

CMC Markets analyst Michael Hewson commented: "Today's European market open isn't expected to see any follow-through to yesterday's decline and in a sign of how fickle sentiment is, we're expecting to see a positive open, as the continued ebb and flow of flaky sentiment continues for another day. While concerns around Omicron remains very real the prospect of new restrictions being implemented this side of Christmas has receded somewhat, after the UK cabinet decided to wait for more data on hospitalisations and deaths.

"This delay has inevitably led to criticism from some quarters, however its hard to see what a new lockdown would achieve at this point given that most people have become a lot more cautious less they contract the virus in any case."

In Asia on Tuesday, the Japanese Nikkei 225 index closed up 2.1%. In China, the Shanghai Composite ended up 0.9%, and the Hang Seng index in Hong Kong was up 1.5%. The S&P/ASX 200 in Sydney finished up 0.9%.

The pound was quoted at USD1.3220 early Tuesday, flat from USD1.3221 at the London equities close Monday.

New restrictions are unlikely to stop Christmas celebrations in the UK this week but Prime Minister Boris Johnson has urged caution amid speculation further measures will be needed to halt the spread of the Omicron variant.

As Johnson promised to keep the data under constant review, the Queen abandoned her Christmas at Sandringham and London Mayor Sadiq Khan cancelled the capital's New Year's Eve celebrations.

After a special two-hour meeting of the Cabinet on Monday, the prime minister said the government needs to be clearer about the rate of hospital admissions associated with Omicron, and the effectiveness of vaccines against it, before imposing additional measures in England to prevent the spread of the virus.

Johnson said the government will "reserve the possibility" of implementing new restrictions, causing opposition politicians to accuse him of lacking a clear plan.

The Financial Times said a senior government insider told the newspaper: "We are not planning to introduce new restrictions this side of Christmas."

The euro was priced at USD1.1285, down from USD1.1299. Against the Japanese yen, the dollar was trading at JPY113.73, higher against JPY113.41.

Brent oil was quoted at USD72.24 a barrel on Tuesday morning, rebounding sharply from USD69.78 late Monday. Gold stood at USD1,791.18 an ounce, lower against USD1,793.80.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com