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Consumers

upbeat onjob hopes

THE ECONOMIC recovery is at last setto get underway, with consumer confi-dence on the way up, according to asurvey published today.

Nearly all measures of confidencerose in YouGovs study, pushing itsHeat index to a 18-month high of 98.6in March, up 11 points on Decembersfigure and almost at levels seen two

years ago.The survey found respondents felt

more secure in their jobs than everbefore in the studys three year history, while the business activity index isalmost at a record high and the home

value measure is at its highest levelsince July 2010.

Respondents expect the improve-ment to keep on coming, with antici-pated business activity in their

workplace rising to a record high, andfuture expectations of job security alsoimproving.

Survey data from beyond this studyalso rose, with gains in cash availableto spend, the environment for majorpurchases becoming healthier andconfidence in the governments han-dling of the economy also growing.

Homeowners and those in work arefeeling particularly confident, the datashows, with expectations high thatprospects of success and growing

wealth are improving. The study suggests an economic

recovery is at last on the cards, aftersigns of growth last year were snuffedout by the Eurozone crisis.

ALLISTER HEATH: P2

BY TIM WALLACE

UK ECONOMY

HSBC, headed by Stuart Gulliver, said that the scheme was not commercially viable given their business model Picture: GETTY

THE GOVERNMENT has been dealt ablow in its flagship credit scheme forsmall businesses after it failed to getall of the UKs major banks on board.

HSBC, which accounts for 15 percent of the small business bankingmarket, will not participate in theNational Loan Guarantee Scheme(NLGS) unveiled today because thestructure of the programme makes ituneconomical for the lender. Co-opera-tive Financial Services and ClydesdaleBank will also not take part.

But it was not all bad news for thegovernment yesterday UK growthfigures from the independent Officefor Budget Responsibility are expectedto show a better-than-expected forecastof 0.8 per cent expansion this year, upfrom 0.7 per cent in November.

The OBRs stats are due to bereleased alongside tomorrows Budget.

Despite some banks withdrawingfrom its plan to boost growth, the

Treasury still intends to forge aheadwith the credit scheme and will deliv-er 20bn in guarantees in 5bn tranch-es over the next two years. Bothstate-owned lenders RBS and Lloyds as

well as Barclays, Santander UK andsmall-time business lender Aldermore

have agreed to take part.Chancellor George Osborne says thepolicy will get the cost of borrowingdown by one per cent for small firms

BANKS SPLIT ON20BN LOAN PLANBY JULIET SAMUEL

POLITICS

www.cityam.comIssue 1,595 Tuesday 20 March 2012 FREE

MUAMBAIMPROVINGCARDIAC ARREST

FOOTBALL STAR

TALKS AGAIN P34

WORRIED WORLDSPREADSCLIENTS WAIT FOR CASHKPMG HUNTS FOR FUNDS P10-11

BUSINESS WITH PERSONALITY

with affected loans.But the Treasury has not set any

kind of target for how much it expects borrowing to increase as a result orhow it will otherwise measure the suc-cess of the scheme.

HSBC and others were preventedfrom participating in part by

European rules requiring them to paya charge to do so.The scheme works by lowering the

cost of banks wholesale funding by

giving a government guarantee onsome of their debt. They are thenrequired to pass on that saving tosmall businesses.

But because HSBC funds its lendingout of customer deposits a practice

being encouraged by regulators and bythe bank balance sheet levy its cost

of wholesale funding is too low for asubsidy to make a difference. The fee to participate in the pro-

gramme means HSBC would actually

have to pay to take part. The bank saidit supports the aims of the policy butthat it is not commercially viable.

Those that do take part will have topay the government the full benefit ofthe guarantee, although they are like-ly to be able to pocket a little to paytheir administration costs.

A Treasury source said that theattraction for them was to expandtheir market share via the scheme.

BUDGET: P7-8

Certified Distribution

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News2 CITYA.M. 20 MARCH 2012

Non doms fleeUK tax attack

THE NUMBER of individuals regis-tered as non-domiciled with HM rev-enue and customs (HMRC) has fallendramatically in the two years since anew levy was imposed on them, fig-ures revealed yesterday.

Labour chancellor Alistair Darlingimposed in 2008 a 30,000 annualcharge on non-doms who have

worked in the UK for more than afew years.

Since 2007-08, the number hasfallen from 140,000 to 123,000 in2008-09 and 118,000 in 2009-10,

which law firm McGrigors believes isdown to the charge and could risklosing the government revenue as itdrives wealthy residents abroad.

A lot of the wealthiest non-domi-ciles are highly mobile many of

them will have taken the 30,000charge as a signal that they are nolonger welcome in the UK, saidMcGrigors director Ray McCann.

The charge was touted as a fleabite when it was f irst mooted butthat flea bite has clearly been suffi-ciently irritating to drive thousandsof non-domiciles overseas.

With the amount of tax collectedfrom the charge diminishing, there

will come a point at which you haveto question whether any additionalrevenue is being raised at all. Non-domiciles often have huge spendingpower, but if theyre not in the coun-try, they cant spend or pay tax here.

The charge is set to be increased to50,000 in April, which McGrigor

believes adds to the anti-businessfeel of UK tax law, which includes(for now) a 50p top rate of incometax and increasing wealth taxes.

BY TIMWALLACE

TAXATION

Economic confidence improving again

DONT say it too loudly but the econ-omy appears to have gained tractionagain. An interesting new gauge sug-gests that confidence and activity aremaking a strong recovery. Coming aday before George Osborne delivers hisBudget, this is decent news for thechancellor, though any rebound inGDP will most likely be modest.

YouGovs Heat index based onthousands of interviews every month has surged from the consistently lowlevels seen during 2011. The first two

weeks of March saw it record its high-est reading since June 2010, though it

still has some way to go before achiev-ing the post-recession highs of theSpring of that year.

Nearly all measures are performingbetter than they have for some time

with most at their highest level sincesummer 2010 or earlier. Homeownersand the employed are finally feeling

better. The overall index reached justshy of 99, its highest level for over 18months; it is 11 points higher than inDecember, seven points better than in

January and six points better than inFebruary. The improvements includeperceptions of current job security (ata three year high), future job security,current business activity in their work-place (which has strongly increased)and future expected activity. Theirpropensity to make major purchases isat its highest level since late 2009.

Its not all good news, of course:homeowners appear excessivelyupbeat about increases in the value oftheir house, while improvements intheir perceived current financial posi-tion appear to have peaked. As to the

governments handling of the econo-my, readings are marginally betterthan for most of 2011 but well belowthe post-election levels in 2010, duringthe coalitions honeymoon period.

It is hard to predict accurately whatthe number crunchers will put overallgrowth at during the first quarter. Oiloutput has tumbled, which coulddepress GDP. But it does seem that con-sumers and firms are feeling moreconfident. Long may that continue.

WEALTH TAXES MAY RETURN This is what I expect to hear in theBudget: the top 50p tax rate will be cutto 45p starting in 2013. It may eventu-ally be eliminated completely, perhapsduring the following year but only ifsome conditions are filled. Child bene-fit will be withdrawn from those on50,000 (hitting fewer people than pre-

viously thought); the personalallowance will be hiked to 10,000 by2014, one year early.

But I suspect Osborne will also intro-duce a new, higher band for stamp

duty (this will be entirely different tothe avoidance crackdown, which has

been well-trailed and is relativelyuncontroversial). At present, all housesabove 1m are hit by a five per cent

duty payable by purchasers. This newrate would be higher (perhaps six percent) and start on even more expensivehomes (perhaps 2m).

I hope Im wrong about this. Sayinghigh earners are entitled to keep moreof their income, but not if they want tospend it on an expensive home, wouldsuggest that Osborne remains weddedto Brownonomics. The supply-side casefor taxing those on higher incomesless is that they will be happier to basethemselves in the UK and create more

jobs not that one tax cut should becompensated by a tax hike. This would

be a case of new Labour-style triangula-tion. The left says one thing; the free-marketeers say another so lets find athird way to keep everybody on side.

Well find out [email protected] me on Twitter: @allisterheath

Osborne could see the Treasury lose cash as non-doms flee the UK Picture: GETTY

NEWS | IN BRIEF

Goldman Sachs starts staff cullGoldman Sachs has begun a new roundof staff cuts in its trading and invest-ment banking divisions, three sourcesfamiliar with the matter said, a sign of acontinued penny-pinching at the biggestbanks. The job cuts follow 2,400 posi-tions Goldman eliminated last year. The

latest round of cuts is part of Goldman'sannual culling process in which the com-pany fires employees who miss perform-ance targets or can be replaced withtechnology or less expensive staff.Recent staff reductions have been lessdrastic than the culling Goldman per-formed in March 2011, when five percent of its trading staff was let go.

Facebook banks get small feeFacebook will pay a fee of just 1.1 percent to underwriters of its initial publicoffering, a source with knowledge of thecompany's plans said yesterday.Facebook's underwriters include MorganStanley, JP Morgan, Goldman Sachs,Bank of America, Barclays and Allen &Co. Earlier this month, the company alsonamed an additional 25 banks as under-writers. The smaller-than-usual fee isoffset by the size of the $5bn float.

EDITORS LETTER

ALLISTER HEATH

Editorial StatementThis newspaper adheres to the system of

self-regulation overseen by the Press ComplaintsCommission. The PCC takes complaints about theeditorial content of publications under the EditorsCode of Practice, a copy of which can be found atwww.pcc.org.uk

Printed by Newsfax International,Beam Reach 5 Business Park,Marsh Way, Rainham, Essex, RM13 8RS

4th Floor, 33 Queen Street, London, EC4R 1BRTel: 020 3201 8900 Fax: 020 7248 2711Email: [email protected] www.cityam.com

EditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowBusiness Features Editor Marc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Gavin BillennessPictures Alice Hepple

CommercialSales Director Jeremy SlatteryCommercial Director Harry OwenHead of Distribution Nick Owen

Distribution helplineIf you have any comments about the distributionof City A.M. Please ring 0207 015 1230, or [email protected]

To be registered as a non-dom anindividual must be resident in theUK on a temporary basis, usually

with a plan to return to the countryof their, or their parents, birth. Theycan keep their overseas income andcapital gains safe from UK taxes bykeeping the cash abroad. They payfull UK tax on UK income.

However, HMRC disagrees that thesole reason for non-doms leaving theUK is the 30,000 charge. Whilst

the figures did drop in 2008-9 this islikely to be as a result of the widerfinancial situation and economicslowdown, a spokesman said. Manynon-doms work or worked in thefinancial services sector.

Some of the drop may also beexplained by people changing status

but remaining in the UK. They mayhave chosen to do so if their non-dom tax advantage was worth less tothem than the new 30,000 fee.

SKY PULLED NEWS STORY ON F1 SHARES The chief executive of British SkyBroadcasting ordered a news story to

be removed from the Sky News web-site after an executive producer com-plained that it had upset Formula 1racing teams. Jeremy Darroch inter-

vened after the article, whichdescribed a controversial agreementinvolving F1 chief executive BernieEcclestone and two racing teams,appeared on the eve of BSkyBs inaugu-ral broadcast of the global motorsport.

POLYUS SHELVES PLANS FOR LONDON IPORussias Polyus Gold has suspendedplans to join the FTSE 100 after becom-ing bogged down in long delays whileseeking approval from a foreign invest-

ment commission chaired by Russianleader Vladimir Putin. Polyus said yes-

terday that it had sent the foreigninvestment commission a letterannouncing it had withdrawn itsrequest to seek a full listing in UK amove only permitted with the com-missions approval.

EU DEMANDS GOOGLE RESPONSE TOPRIVACY WORRYEuropean data protection authoritieshave asked Google to respond to con-cerns about the search engines newprivacy policy, which came into forceat the beginning of March. FrancesNational Commission for Computingand Civil Liberties (CNIL) has written toLarry Page, Google chief executive, say-ing it deeply regrets that Google didnot delay the application of the newpolicy.

MARGARET COLE SET TO JOIN PWCThe woman who struck fear in tradingrooms across the City is joiningBritains biggest accountant in a seniorexecutive role, The Times can reveal.Margaret Cole, who became one of themost powerful women in the SquareMile after transforming the FSAsenforcement division, will become thesenior legal adviser at PwCs Britishdivision in the autumn.

JAPAN GETS HOLD OF NORTH SEAMONSTERS

The British company that provides thehuge jack-up vessels that plant giant

wind turbine towers on the bed of theNorth Sea has been sold by RiverstoneHoldings for 535m.

COURTROOM CLASH OVER MAYBOURNEHOTEL GROUP

A legal dispute over the ownership ofthree of Londons most famous hotelsopened in the High Court yesterday.

The battle for control of MaybourneHotel Group, owner of Claridges, theConnaught and The Berkeley sets Irishentrepreneur Patrick McKillen againstSir David and Sir Frederick Barclay,owners of Telegraph Media Group.

VATICAN BANK FACES FRESHCONTROVERSY

The Vatican bank formally known asthe Institute for Works of Religion orIOR has had one of its accountsclosed by JP Morgan after stone-wallingrequests for information.

FRENCH SCHOOL KILLINGS SPARKHORROR

A manhunt was under way in thissouthern French city for a lone gun-man who opened fire on a Jewishschool yesterday, killing four peopleincluding a father and his two sons,

with a weapon used in two similarattacks in recent days.

REPUBLICAN BUDGET TARGETS TAXESUS House Republicans, searching foran election-year message amid a mud-dled political and economic land-scape, will introduce a 2013 budget

Tuesday that cuts tax rates and pro-vides for just two individual bracketsof 10 per cent and 25 per cent andends the Alternative Minimum Tax.

WHAT THE OTHER PAPERS SAY THIS MORNING

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APPLE announced yesterday it willpay investors a quarterly dividendof $2.65 per share from July, endinga dry spell for shareholders that haslasted more than 16 years.

Turning his back on Steve Jobsfirm policy of not paying dividends,Apple boss Tim Cook re-introducedthe payout which will cost$9.88bn a year alongside a $10bn,three-year share buyback scheme.

Cook (pictured) hinted at Applesannual general meeting last month

that the board is thinking aboutthis very deeply.

But investors could be unim-pressed by the stocks 1.8 percent yield, which falls short ofthe S&P 500s average ratio.

AT&T, the only compa-ny with a largerannual dividendbill than Apple (at$10.43bn), offersa yield of 5.6 percent, while

Microsoft pays 2.4 per cent. The Cupertino-based company

ended its last quarter sitting on a$98bn cash pile and has facedincreased pressure from sharehold-ers to start divvying out funds.

The dividend and share buybackprogramme will use about $45bnof the companys spare cash overthe next three years but theiPhone and iPad maker is expectedto rake in more cash at a faster rate.

Apple will fund the payouts fromits domestic cash pile, as tuckinginto its $65bn of overseas fundswould incur a hefty tax bill.

Some have questionedwhether Apple has resorted toa dividend due to a lack ofother ideas for its monumen-tal spare cash pile. But Cookassured investors: We are

innovating at an incredible paceand building a tremendous

ecosystem. He added salesof the new iPad led to a

record weekend.Shares rose 2.7 per

cent to $601.10.

Apple bitesthe bullet ondivi payouts

DEUTSCHE Boerse plans to sue theEuropean Commission for blockingits $9bn (5bn) merger with NYSEEuronext, to recoup merger costsand keep the door open for futuredeals in the derivative markets.

The European Commissionantitrust authorities blocked the tie-in last month, saying it would haveled to a near-monopoly in Europeanfinancial derivatives worldwide.

Deutsche Boerse is of the viewthat several aspects of the decisionare incorrect, the operator of theFrankfurt stock exchange said in astatement yesterday.

The exchange group would notcomment on the lawsuit beyond itsstatement, but chief executive RetoFrancioni said last month that anappeal might force European regu-lators to change their definition of

the derivatives markets, which doesnot include over-the-counter trad-ing.

European regulators did not takeinto account the over-the-counterderivatives market when assessingthe antitrust implications of theproposed deal.

Deutsche Boerse said yesterday it would bring the suit before theEuropean court in Luxembourg.NYSE Euronext declined to com-ment.

EU faces lawsuit

from Deutsche

Boerse over deal

BY LAUREN DAVIDSON

TECHNOLOGY

CAPITAL MARKETS

News 3CITYA.M. 20 MARCH 2012

APPLES ANTI-DIVIDEND POLICYFINALLY BITES THE DUST

Apple Verizon ExxonAT&T Microsoft

1.81% 5.09% 2.2%2.42%5.61%

...AND YIELD STILL LAGS BEHIND SOME RIVALS

FIRST DIVIDENDPAID JUNE 1987

DIVIDEND DUEJULY 2012

LAST DIVIDENDPAID DEC 1995

$0.12

$2.65

$0.06

$0PAIDOVERTHELAST16YEARS

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WITH bidding partners ValueAct andCVC urging shareholders to take noaction, and the market driving Misysshare price above the offer from Vista,the future of the banking software

firm is by no means clear.Misys acting chief executive TomKilroy said the board thinks this islikely to be the best deal available,adding that he would be willing to dis-cuss an offer from another firm but itis unlikely this deal will be bettered.

Analysts agreed, suggesting thatValueActs role as the biggest share-holder in Misys was to stoke the bid-ding war and drive the companysprice up.

Panmure Gordon analyst GeorgeOConnor told City A.M. ValueAct would be less keen to bid in theabsence of Mike Lawrie, the formerValueAct employee who stepped downas Misys chief executive this month.

Lawries vacancy was set to be filled by Temenos chief Guy Dubois, butsince the Swiss firm walked away fromthe deal last week the position hasbeen open.

OConnor pointed to Stephen Kelly,

MicroFocus previous boss who nowworks for the government, and KevinLoosemore, current chief executive ofMicroFocus, as two likely candidatesfor the Misys top seat.

But Misys director and ValueActchief Jeffrey Ubbens refrainmentfrom backing Vistas offer suggests ValueAct and CVC have not yet hadtheir last say on the matter.

The duo has until 2 April to put up

or shut up regarding a Misys bid.

AN ANIMATED market reaction yester-day sent Misys shares above the bidprice from Vista Equity Partners, which yesterday offered Misys a1.27bn route to salvation one weekafter Temenos walked away from amerger deal with the banking soft-ware firm.

Vista, a US-based private equityfirm, said it was prepared to lay out350p per share, offering a rate 32.1 percent above Misys three-month average

closing price before discussions withTemenos were announced, and a pre-mium of 6.2 per cent on Fridays clos-ing price of 330p.

But eager investors sent the shareprice climbing 7.4 per cent to 354p.

With the exception of non-executivedirector Jeffrey Ubben, who abstaineddue to his role as chief executive ofpotential rival bidder ValueAct, Misysindependent directors offered unani-mous support for Vistas bid.

The private equity firm, actingthrough investment vehicle MagicBidco, said it had garnered irrevocableundertakings of 21.9 per cent, includ-ing the approval of Schroder and Threadneedle, Misys two biggestshareholders behind ValueAct.

But ValueAct, which said on 5March it was contemplating a cash bidalongside CVC, urged Misys share-holders to take no action and said itcontinued to consider making a move.

Vistas proposal will see Misys com-bined with Turaz, the trade and riskmanagement software company itacquired in January from ThomsonReuters, to create the global leader indelivering solutions to the financialservices industry, said Misys actingchief executive Tom Kilroy.

Merchant Securities analyst RogerPhillips told City A.M. the prospect of amerger with Turaz is solid justifica-tion for the bid price.

Vista has over $6bn under manage-ment and focuses on acquiring enter-prise application software companies.

To date the firm has completed 68 software-related transactions worthalmost $15bn.

Vistas offer came as Misys releasedits third quarter trading update whichrevealed revenue was down 12 percent on an 18 per cent drop in orderintake a lag the company put downto customers delaying rather than can-celling their decisions due to the tur-bulence of the recent bidding war.

Vista offer forMisys promptsshares to soar

...But ValueAct remindsinvestors it could yet bid

BY LAUREN DAVIDSON

TECHNOLOGY

Misys chairman Sir James Crosby welcomed Vistas offer


ANALYSIS l Misys PLC

13 Mar 14 Mar 15 Mar 16 Mar 19 Mar

360

350

340

330

320

354.0019 Mar

Mike Lawries departure as Misys bossmeans the company needs a new chief

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BY LAUREN DAVIDSON

TECHNOLOGY

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THE MINIMUM wage will be increasedin October for most workers, the gov-ernment announced yesterday butthose under the age of 21 will not seetheir pay rise as ministers fear it couldprice them out of the labour market.

Adults aged 21 or over must be paidat least 6.19 per hour from October,up 1.82 per cent from the current rate.

Employers groups welcomed therise, which came in below the 2.5 percent last year, though labour bodiesargued a rise for young people wouldhelp boost consumer confidence.

This shows appropriate restraint ata time of falling inflation and risingunemployment, said the British RetailConsortiums Stephen Robertson. Anylarger increase would have piled extrapressure on retailers at a time of weakcustomer demand.

Minimum wage rise keptdown to help firms hire

Retail consortium chief Stephen Robertson welcomed the decision Picture: GETTY

BY TIMWALLACEUK ECONOMY

Budget news 7CITYA.M. 20 MARCH 2012

NEWS | IN BRIEF

Consumers call for fuel tax cutConsumer groups have stepped up pres-sure on the chancellor to relievemotorists from the soaring cost ofpetrol. A survey by Money Supermarketyesterday claimed that almost four in 10

Brits believe a cut in fuel duty wouldhelp the economy grow, and less thanone in ten would like the levy kept on itspresent trajectory. The AA has alreadycalled for the duty to be frozen.

MPs lobby for video games helpA group of MPs has written to the chan-cellor asking for the video games indus-try to be given tax breaks in Britain.Members of the all-party computer andvideo games industry group has called

for tax relief for the fast-growing sector,a step that it claims could create morethan 4,000 jobs over the next five yearsand increase expenditure in UK videogame studios.

MORE NEWSONLINE

www.cityam.com

ANALYSIS l Minimum wage per hour Aged 21+

Aged 18-20

Aged 16-17

Source: Low Pay Commission

2000 2002 2004 2006 2008 2010 2012

6

5

4

3

2

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PENSION funds have agreed to invest2bn in infrastructure projects by theend of next year, David Cameronannounced yesterday, beginning whatthe government hopes will become aflood of private sector investment.

He told an audience of engineersthat the country needs an extra500bn of investment to update andreplace its aging infrastructure, andthat the state cannot afford to be theonly source of funds.

One possible solution could be toallow firms to build and maintainroads, taking tolls as revenue.

The government had hoped pen-sion funds would be willing to spendat least 20bn on projects includingroad and energy development, buthas had to settle for 2bn for now.

This represents just a small taste ofwhat I hope will follow if we get thisright, the Prime Minister said, argu-

ing that over time, investment ingood infrastructure can pay for itself.

Cameron also hinted that alloptions were still on the table forexpanding the UKs airport capacity.

Im not blind to the need toincrease airport capacity, particularlyin the south-east, he said.

Infrastructure projects should be agood match for pension funds, whichneed to generate stable, long-termreturns for pensioners, but complexplanning rules and a lack of largefunds has stifled investment.

As a result, the government is seek-ing to set up a specific pot into whichthe funds can put investors cash.

Meanwhile, housing ministerGrant Shapps yesterday announcedan extra 150m will be made avail-able to restart stalled building proj-ects.

The extra cash takes the Get BritainBuilding fund to a total of 570m which the government hopes willhelp in the construction of 16,000homes and support 30,000 jobs.

Private funds

show interestin toll roadsBY TIMWALLACE

POLITICS

INCOME tax payers will receive a breakdown of the total tax andnational insurance they pay anddetails of where those revenues arespent from 2014-15, George Osborneis expected to announce in the budg-et tomorrow.

An initial group of 20m people or two-thirds of earners willreceive a personal tax statementbreaking down exactly what propor-

tion of their income is paid to the

state and what it is being spent on.The government hopes to expandthe scheme to all income tax payersin the following years as part of itsdrive to make the tax system moretransparent and to convince voters ofthe need for public spending cuts.

In November, Treasury ministerDavid Gauke outlined proposals forthe tax, saying: We plan to lift thelid on tax so that people understandhow much they are paying, what

their overall tax rate is, and what

they should be paying, in the sameway that the government has liftedthe lid on what they are paying for.

Specimen statements prepared bythe Treasury show someone on25,200 a year sees 5,702.12 of theirincome go to the Exchequer in directtaxation. Of that, the biggest propor-tion goes on welfare, which accountsfor 1,900.71. This is followed by992.91 for health and 743.26 foreducation.

Workers will learn exactlywhat their taxes are fundingTAXATION

Budget news8 CITYA.M. 20 MARCH 2012

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ANDREW CAULFIELD | CAULFIELD SEARCH

Given that our infrastructure is a bit of a mess I dont think rail pri-vatisation is the best model to follow on the roads: it certainly has-nt benefited commuters, just the shareholders of Stagecoach.

ROB WILLIAMS | PARLIAMENT HILL

It wouldnt affect me as I dont drive because the prices are com-pletely ridiculous. They really penalise you for owning a car, espe-cially in London. But the public transport is good enough.

DAN SHERIFF | EUROMONEY

If you look at PPP deals elsewhere they dont always work. Youcould have a situation where motorways dont do correct trafficforecasts, go bust and the taxpayer has to foot the bill anyway.

* These views are those of the individuals below and not necessarily those of their company

CITY VIEWS: SHOULD DAVID CAMERONPRIVATISE THE ROADS?

The government is looking to unlock private investment in infrastructure Picture: GETTY

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You can trade safely and securely with us as all client money is held in segregated accounts

in accordance with the FSAs client money rules. And as part of an AIM listed organisation,

were well capitalised and debt free with an exceptionally high tier one capital ratio of well

over 100%.

Capital Spreads is a trading name of London Capital Group, which is authorised and regulated

by the Financial Services Authority and a member of the London Stock Exchange. Registered

Address: 2nd floor, 6 Devonshire Square, London, EC2M 4AB. Registered Number: 3218125.

Losses can exceed your initial deposit. Spread betting may not be suitable for everyone.

capitalspreads.com

For further reassurance please do not hesitate to contact our Compliance or Accounts

departments on +44(0)20 7456 7000.

Better Value Spread Betting

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ETX Capital is poised to mop up left-over assets from the spectacular col-lapse of its rival WorldSpreads as thefirms administrators start work onfinding millions in missing clientmoney.

ETX, a rival to spread betting firm WorldSpreads, which went intoadministration over the weekend, ismost interested in snapping up tech-nology assets and the firms 15,000-strong client list.

But many of those clients will beout of pocket after WorldSpreadsconfirmed that it owes its customers29.7m but can only find 16.6m ofthat money.

A source close to the situationsaid that the shortfall is due toalleged fraud that could have beengoing on for as long as f ive years.

Administrators at KPMG, which ischarged with dismantling the firm,

believe it could take months to getany money back to account-holders

because the case involves allegedlymixing client cash with the compa-nys own reserves, meaning themoney could be particularly diffi-cult to allocate.

Industry insiders said they wereshocked as details emerged overthe weekend.

One told City A.M. that he had atfirst thought it was a problem of thefirm having too little capital beforereports indicated that an allegedfraud is being examined.

There are also fears that it couldhave repercussions for the reputa-tion of the relatively new spread bet-ting industry.

Patrick Latchford, formerly ofCMC Markets and founder of indus-try consultancy Perpal, said: Its

bad for the industry because it putsout all the wrong noises. It suggestsits badly run. Whilst there has beena reluctance to professionalise the

WorldSpreads

losses as ETXBY JULIET SAMUELSPREAD BETTING

COMMODITIES giant Glencore isclose to a deal to buy Viterra,Canadas biggest grain handler,according to a source familiar withthe matter.

Viterra and Glencore are still intalks on price, but a deal could bereached within days at a price aboveC$16 per share, said the source, whocould not speak publicly becausediscussions are ongoing.

At C$16 a share, Viterra would beworth some C$5.9bn (3.8bn).

Viterra said in a statement yester-day it was in exclusive talks with oneprospective buyer, but itdid not identify the suit-or.

Glencore, whichis also pursuing a56bn merger

with Xstrata,has part-

nered withC anadi an

fertiliser maker Agrium and a private-ly-owned grain trader Richardson

International, with the aim of split-ting the company between them.Viterra, the leading Canadian han-

dler of spring wheat, barley and oats,has become a takeover target largelydue to the Canadian governments

decision to end the WheatBoards monopoly on

export sales of wheatand barley, later this

year. The acquisition of

Viterra would helpGlencore, led by IvanGlasenberg (left) to

expand its pres-ence in the wheat andb a r l e y

e x p o r tm a r -kets.

Glencore is in exclusive talks tobuy Canadian grain giant Viterra

COMMODITIES

STAKE YOUR CLAIM

Administrator KPMG will have details ofall account-holders but you can call themto get any further information and makesure you are in line to receive furtherupdates. The relevant number is 0203284 8829 and you can check for newson www.worldspreads.co.uk.

UNDER 50,000? DONT WORRYUnder the terms of the Financial ServicesCompensation Scheme, all individual

holders of trading accounts at authorised

firms (of which WorldSpreads was one)will get their full money back up to50,000. So if you had less than thatamount in your account at close of playon Friday, you will eventually see it comeback. But that doesnt apply to profes-sional or institutional traders.

YOUR 15 MINUTESUnless you had a segregated account,you can expect to have your details pub-

lished as part of the administration

process, whether you like it or not. A DATE FOR YOUR DIARYKPMG is obliged to make a report oftheir findings in 10 weeks the firstweek of June which will detail the likeli-est outcome for creditors.

WAIT AND SEEDont expect a quick resolution: it is likelyto take months to work out who getswhat.

Wheres my money? What to expectif you had a WorldSpreads account


WorldSpreads founder and chief executive Co

management in some firms, it is well-run in most companie Worldspreads falling into adminis-tration in this way has shocked theindustry.

Its never good for an industrywhen a competitor crashes like thisand it can never be worse than whenclient funds are missing, he added.

Clients of the collapsed company

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clients await

eyes up assets

d on Friday Picture: Micha Theiner/CITY A.M.

US private equity firm Carlyle Grouphas hired Alexander Pietruska as theEuropean head of its financial servic-es group as it looks to grow its activi-ties in the region.

Pietruska will be based in Londonand begin his role as managing direc-tor and European head of GlobalFinancial Services Partners in earlyApril, the company said.

He joins from Lloyds BankingGroup, where he was director ofgroup strategy and corporate develop-ment, and will report to OlivierSarkozy, head of the global financialservices team.

We expect Alexanders wealth ofexperience will enable us to expandthe GFSP platform in the Europe,Middle East and Africa region,Sarkozy said in a statement.

The global financial services grouphas put money into BankUnited,

Boston Private, Bank of Butterfieldand OzForex.

FRESH from its appointment toadministrate MF Global UK, KPMG isback in the spotlight as the firm tocome in and clean up the mess left bythe collapse of WorldSpreads.

The two cases both involved allegedmixing of client and company money,but while MF Global was a huge multi-national broker, WorldSpreads is a rel-atively small and simple business.

KPMG was criticised for taking a

long time over MF Global UK and forpublishing a detailed list of its credi-tors. But the company says that itworked out an interim payments sys-tem that actually sped things up forcreditors. A spokesperson for KPMGalso said: People want transparencyin administration and the law requiresus to publish the creditor list.

KPMGs team on the case is beingled by Jane Moriarty and SamanthaBewick.

KPMG called in toclear up the mess

THE CHIEF executive of Man Groupwas awarded a package of nearly $7m(4.4m) for last year but missed out onanother $14m after the hedge fundsuffered during several years of mar-ket turmoil.

Peter Clarkes package for 2011included a $2.9m salary, bonus andshare award and a deferred three-yearincentive award which could beworth up to $4m. The total of $6.98mrepresents a cut of 30 per cent on theprevious year, according to Mansnine month report, which was pub-lished yesterday after it shifted thetiming of its f inancial year.

Clarke missed three year perform-ance targets, set in 2008 and relatingto measures including earnings pershare and return on equity, meaninghe did not pick up an award worth upto $14m.

Man, the worlds largest listed

hedge fund and based in London,endured a turbulent 2011.

Man chief execsees pay drop

Carlyle in keyEuropean hire

PRIVATE EQUITY

HEDGE FUNDS

KPMGs Jane Moriarty is taking charge

BY JULIET SAMUEL

PROFESSIONAL SERVICES


now face months of waiting to seehow much of their money can berecovered. Many will be covered bythe industry-funded FinancialServices Compensation Scheme upto 50,000.

They could also have their per-sonal details published undertransparency rules for administra-tions.

ANALYSIS l WorldSpreads Group PLC

Jan Feb Mar

47.50

45.00

42.50

40.00

37.50

35.00

32.50

37.0019 Mar

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PREMIER Foods, the owner of brandsincluding Batchelors soup and Hovis bread, has admitted that it will beforced to sell more assets as part of anenormous debt restructuring plan.

Britains biggest food manufacturersays it will focus on its core businessesas it struggles to deal with a 1bndebt pile which built up during astring of acquisitions before the creditcrunch.

Yesterday it announced that it hadreached an arrangement to extend theexisting 1.2bn banking facility, duefor repayment next year, until June2016.

However this comes at a price, withthe banks margin set to increase by

one per cent to 3.25 per cent fromJanuary 2014.

Having already earned 400m fromthe sale of businesses during 2011, thefirms new arrangement will force itto raise a further 300m from dispos-als by 30 June 2014.

Year-end pre-tax profits plummetedto a 259.1m loss for 2011, driven by a282m writedown relating to the value of Premiers Hovis bread busi-ness which it bought at the peak ofthe market. Trading profits declined

29 per cent to 173.7m.Having put the financing and

strategic building blocks in place, ourimmediate priorities are to imple-ment this re-financing package, con-tinue stabilising the business, re-focusthe portfolio and invest in our futuregrowth, said chief executive MichaelClarke, who has been brought in fromKraft to turn around the business.

Shares closed down 4.2 per cent at11.5p, against a high of 288p in 2007.

Profits fail to rise atowner of Hovis bread

SHARES in Sprint Nextel fell 4.5 percent yesterday after an analyst reportsaid there is an increasing risk thatthe US mobile provider could end upfiling for bankruptcy in the next fiveyears.

Bernstein analyst Craig Moffettdowngraded Sprint shares to under-perform from market-perform say-ing that the company will face newand larger risks if Apple launches ahigh-speed iPhone later this yearbased on a technology that Sprints bigger rivals have installed morewidely.

He said the companys five-yearcredit default swaps already price in aroughly 50 per cent probability ofbankruptcy.

To be clear, we are not predicting aSprint bankruptcy. We are merely

acknowledging that it is a very legiti-mate risk. And notwithstanding arecent rally in Sprint shares, we believe that risk is rising, Moffettsaid in a research note.

In February, the third-largest USmobile network operator by sub-scriber numbers reported a fourth-quarter net loss of $1.3bn (800m),mainly reflecting the steeper costs ofselling Apples iPhone 4S.

A spokesperson for Sprint declinedto comment.

Sprint slumpsas analyst citesbankruptcy risk

BY JAMESWATERSON

CONSUMER TECHNOLOGY


ANALYSIS l Premier Foods PLC


12.50

12.25

12.00

11.75

11.50

11.5019 Mar

Hovis bread has dragged down profits at Premier Foods Picture: GETTY

Public lost tastefor food brandsPremier Foods may have spent alot of dough on Hovis but it hasproved to be a major drag on thefirms profits. Its 2007 purchaseof arch-rival Rank Hovis

McDougall, the then-owner of theiconic bread brand, for 1.2bn ina debt-laden transaction, nowseems typical of the overly-opti-mistic deals that preceded thecredit crunch and have left thefirm struggling to meet bankrepayments.But at the time there seemed nogrounds for worry. That yearPremier shares hit 288p moreexpensive than a jar of the firmsLoyd Grossman sauce; today theywere trading for under 12p, barelyenough for an Oxo cube.What went wrong? Reduced con-sumer spending has caused themarketplace to change beyondrecognition in recent years asshoppers turn to supermarketown-brand lines, which now com-pete on quality as well as price.

Premier has not always helped

itself in this regard, last year sour-ing its relationship with super-markets in a botched attempt topass on a 14 per cent rise in coststo customers. But most important-ly, the cost of servicing debtmeans that it has failed to investin its main asset: its brands.

BOTTOMLINEAnalysis by James Waterson

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THE BBC has stepped up its search tofind the next director general afterMark Thompson confirmed yesterdayhe will leave the corporation in theautumn after the Olympics.

Thompson, who has been in the jobsince 2004, told BBC Trust chairmanLord Patten of his departure in a meet-ing yesterday and said that the public

broadcaster should begin the processof a replacement as soon as they seefit.

His departure could see the firstfemale director general, with CarolineThomson, the BBC chief operating offi-cer and Helen Boaden, head of news,both tipped as potential internal can-didates as well as head of BBC VisionGeorge Entwistle.

Ed Richards, chief executive ofOfcom and David Abraham, chief exec-

utive of Channel 4, have also beenlinked as likely candidates for the job. Thompson has spent most of his

professional career at the BBC, joiningin 1979 as a production trainee on afast-track programme after graduat-ing from Oxford University.

He spent two years as chief execu-tive of Channel 4 before rejoining theBBC in 2004 in the wake of the Huttonreport, which led to his predecessorGreg Dykes resignation.

BBCs Mark Thompson toleave after the Olympics

Mark Thompson is to leave the BBC in the autumn Picture: GETTY

BYKASMIRA JEFFORDMEDIA


NEWS | IN BRIEF

Amazon buys robot-makerAmazon said yesterday it has agreed tobuy Kiva Systems for $775m (488m) incash, a deal that will bring more robotictechnology to the e-commerce companysgiant network of warehouses. The acqui-

sition, which has been approved by Kiva'sstockholders, is expected to close in thesecond quarter of 2012, Amazon addedin a statement. Kiva develops robots thatzip around warehouses.

Revenue growth slows at AdobeAdobe, maker of Photoshop and Acrobatsoftware, said yesterday that revenuegrowth has slowed as sales of its widelyused Creative Suite software fell, missingits forecasts, ahead of widely anticipated

product launches this quarter. Revenuerose 1.7 per cent to $1.045bn (657m) inits quarter ended 2 March. Sales at thedigital media unit fell four per cent froma year earlier to $730m.

8/2/2019 Cityam 2012-03-20

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Terms apply. Subject to credit check. BlackBerry, RIM, Research In Motion and related trademarks, names and logos are t he property of Research In Motion Limited and are registered and/or used in the U.S. and countries around the wo rld. Android and the Android logo are trademarks of Google Inc.

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HEALTH A DVICE,

ON YOUR DOORSTEP

HOUSEBUILDER Berkeley says it has hitover 1bn in forward sales, up from813m last May, driven by strongdemand for residential property inLondon and the south east.

The firm used a trading update toannounce that it had acquired sevensites for a total of 80m sinceNovember, including a former RoyalMail sorting office in Twickenham anda site on Albert Embankment inLondon with consent for 242 newhomes.

As a result the group bullishly pre-dicts that potential income from itscurrent land bank will exceed 2.5bnby the end of 2012.

Berkeley also said it is on track to

double profit before tax to some220m by April 2013, two years earlierthan originally planned.

This puts in place the solid founda-tion from which to return 13 pershare in cash to shareholders bySeptember 2021, the firm said.

Berkeley, which sells largely to buy-to-let investors and overseas buyers,emphasised that Londons globalappeal was underpinning sales to inter-national purchasers: The attraction ofLondon as a World City is key to under-

pinning sales to international buyersand the current constrained supply ofquality new homes in the best loca-tions in the South East of the UK placesa premium on Berkeley's product.

Shares in the firm closed down 1.9per cent at 13.67.

News14

ANALYST VIEWS: CAN BERKELEYS BOOMCONTINUE DURING 2012? Interviews by James Waterson

ROBIN HARDY | PEEL HUNT

Im quite surprised that the share price has been as weak as it has been.Theyve bought a lot of land while keeping their debt under control. People wouldhave expected their debt to be north of 100m and its only at 84m.

SIMON BROWN | NORTHLAND UK

A doubling of profits in the three years to April 2013 and a commitmentto return 13 per share in a dividend stream from 2015 show long term strength indepth. The group has the means to deliver on its promises.

JONATHAN JACKSON | KILLIK & CO

Trading has remained robust, with net cash on forward sales exceeding1bn. The group has continued to invest in land, acquiring a further seven sites totake its gross margin potential to over 2.5bn ahead of previous guidance.

BY JAMESWATERSON

PROPERTY

London boostfor Berkeley

Berkeleys chief executive Tony Pidgley

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Please remember, investments into an ISA will depend on individual

circumstances and all tax rules may change. The value of investments and

income can go down as well as up and you may not get back the amount

you invested. The Select List is not a recommendation to buy or sell funds.

Annual management charges apply. If you would like further information,

please contact our UK call centre. Alternatively, if you require a

recommendation, please contact an adviser.

Ours or theirs.

Yours for less.

*0% initial charge if you invest in Fidelity or Select List funds online or by phone by midnight on 5 April 2012. Terms and conditionsapply, offer ends 30 March 2012 and applies to investments over 10,000. ** Based on gross sales for w.c. 5 March 2012. The SimplifiedProspectus or Key Investor Information Document (KIID) for Fidelity and non-Fidelity funds is available in English and can be obtained fromour website at www.fidelity.co.uk/importantinformation or by calling 0800 41 41 61. The full prospectus for Fidelity funds may also beobtained from Fidelity.For non-Fidelity funds the full prospectus and the KIID or Simplified Prospectus are available from the Fund providerdirectly. Issued by FIL Investments International, authorised and regulated in the UK by the Financial Services Authority. Fidelity, Fidelity

Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited. CSO3420/0312/V1

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CITYA.M. 20 MARCH 2012 15

Got A Story? [email protected]

City workers enjoy a lunch-time stroll yesterday along Watling Street Picture: Laura Lean / CITY A.M.

S AINSBURYS chief Justin King has beenbusy pounding the pavement in orderto raise money for Sport Relief aheadof the Sport Relief Mile this Sunday.

King, whose stores stock much of theSport Relief charity merchandise, has run32 miles across the UK in March in thehope of beating last years efforts for thecharity.

Hes been accompanied on theruns by more than 1,000 colleaguesin various locations around the coun-try including Stoke Citys footballground, Horsham cricket club and theCrayford dog track.

King has run with one worker fromevery Sainsburys shop across thecountry.

Yesterday he said: Im incredibly

proud of the fund raising efforts ofSainsburys colleagues who have yetagain pulled out all the stops in supportof a great cause.

Together we hope to raise over 1.8mfor Sport Relief, making a real difference

both here in the UK and abroad.King says that anybody wanting to sign

up to the Sainsburys Sport Relief Mile canenter at www.sportrelief.com/mile, withthe option to run (or walk) one, three or sixmiles.

Entry costs 6 for adults, 3 for children and 15for a family of four.

Buying a mansion is obviously hardwork, but the good people at estate

agent Knight Frank have made it less ardu-ous to browse the global market for castlesand lake-adjacent vineyards with its newlyupdated iPad app.The application, which is already clocking

up 10,000 downloads a month, allowstime-poor millionaires to search for proper-ties by proximity to golf courses, ski slopes

and water views.Those with less than half a million in

the bank might be advised to steerclear its free to browse, but dis-concertingly easy to find oneselfspeaking with an agent in just acouple of clicks...

The Capitalist

CITY EYE

JUSTIN KING GOESTHE EXTRA MILE

FOR SPORT RELIEF

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CABLE company Ziggo providedanother boost to the slow recovery inEuropes equity markets yesterdaywhen it increased the value of its list-ing to as much as 925m (768.6m).

Hollands largest cable firm saidstrong demand had prompted it toincrease the number of shares avail-able in its initial public offering in Amsterdam, which had originallybeen estimated at up to 800m.

If it reaches 925m it would be the

largest IPO in Europe since the mid-dle of last year, when a series of firmsput their listing plans on hold as thesovereign debt crisis created turmoilin the markets.

DKSH, a Swiss firm which helpscompanies market and distributegoods in Asia, is due to make its mar-ket debut today and to raise up toSFr900m (620m) for its majorityowner.

Ziggo said its selling shareholders, which include private equity firms

Cinven and Warburg Pincus, wouldnow sell as much as 50m shares, or a25 per cent stake in the company, if a15 per cent over-allotment option wasexercised.

The company is set to price the saleat the top end of its original16.50 to18.50 per share range, a source closeto the deal said last week, afterinvestors were told those who put inorders below 18.50 risked missingout.

Order books were due to close yes-terday, a day earlier than originallyplanned, and Ziggo will make its mar-

ket debut on the NYSE Euronext Amsterdam stock exchange tomor-row.

JP Morgan and Morgan Stanley arethe joint global coordinators for theoffering, and joint bookrunnersalong with Deutsche Bank and UBS.

ABN Amro, HSBC, Nomura andRabobank are acting as joint leadmanagers and ABN Amro andRabobank are the joint retailbookrunners. Socit Gnrale is co-lead manager, Ziggo said.

Ziggo IPO setto be biggestof year so far REXNORD Corporation, which manu-factures power transmission and water management producannounced terms for an IPO on the

New York Stock Exchange yesterday. The Milwaukee-based company

plans to raise $450m (283m) by offer-ing 23.7m shares at a price range of$18 to $20.

At the midpoint of the proposedrange, Rexnord would command amarket value of $1.87bn.

Rexnord, which was founded in1891 and booked $1.9bn in sales in2011, plans to list under the symbolRXN.

This is Rexnords second attempt togo public. The company first filed in July 2008, before withdrawing inOctober 2009.

Private equity firm Apollo

Management will own 69 per cent ofshares after the offering.

BofA Merrill Lynch, Goldman Sachsand Credit Suisse are the jointbookrunners on the deal.

Yesterdays announcement another sign that the IPO market inthe US is pretty healthy. This is in con-trast to London where companies,especially home-grown ones, havefailed to find support from the long-only institutions after a spate of dis-appointing flotations.

Rexnord movescloser towardsNew York listing

BY PETER EDWARDS

CAPITAL MARKETS

MANUFACTURING


SLIM PICKINGS: THE BIGGEST IPOs SO FAR THIS YEAR IN EUROPE

Company Nation Proceeds Exchange

Ziggo Holland $1.2bn Amsterdam

Ruspetro Britain $260.77m London

Alcentra European Floating Rate Britain $231.795m London

Inside Secure SA France $104.326m Paris

Naibu Globa l Intl Company Jersey $78.695m London (AIM)

Ozak Gayrimenkul Yatirim Turkey $55.535m Istanbul

EOS Imaging SA France $47.567m Paris

Source: Thomson Reuters

Ziggo, headed by chairman Andrew Sukawaty, is set to expand its IPO

8/2/2019 Cityam 2012-03-20

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WHEN Julius Baer set up a private bank in Switzerland in the 1890s,modern skiing had just emerged andSir Arthur Conan Doyle would speeddown the Alps in a tweed suit.

Now, 120 years on, the Baer familyhas severed its link with the manage-ment of the bank. Raymond Baer hasquit as chairman after nine years and

will take up an honorary role in April.He will head a committee formed todeal with a US tax investigation. The52 year old will oversee co-operation

with the US Department of Justice,which is looking into the affairs of 11banks, also including Credit Suisse.

Baer will continue to support thebank in finding constructive solutionsfor the past chapters affecting JuliusBaer and the banking industry atlarge, the bank said. It insisted his

move was not related to his role on thecommittee, which will also deal withother legacy tax issues in Europe.

In February Julius Baer said itexpected to have to hand over clientdata and pay a fine as part of the probeinto wealthy Americans who put cashin Swiss banks to avoid paying taxes.

The Baer familys stake is nowunder three per cent. Daniel Sauter, a

veteran of Glencore and Xstrata, is setto become chairman.

Julius Baer chair severs120 year old family ties

Raymond Baer has been with the family bank for nearly 25 years

BY PETER EDWARDSBANKING


NEWS | IN BRIEF

Bahrain buys GL EducationInvestcorp, a Bahraini alternativeinvestment manager, yesterday said itacquired UK-based education firm GLEducation Group for an undisclosedamount. Investcorp, which once floated

luxury brands Gucci and Tiffany, said itbought the company from VeronisSuhler Stevenson, a private equity anddebt capital firm focused mainly on edu-cation, media and information sectors.

Tesco Thai property float soarsThe property fund of Tesco's Thai unit

jumped nearly 10 per cent in its tradingdebut yesterday as investors who wereshut out of Thailand's largest IPO in sixyears scrambled to get a piece of the

high-yielding security. The IPO raisedabout 378.8m, the biggest in Thailandsince 2006, but the supply of units fellfar short of the demand, according tobankers involved in the transaction.

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ZAYO Group, a privately-owned fibre-based provider of bandwidth, yester-day agreed to acquire AboveNet for$2.2bn (1.38bn), after making anoffer at $84 a share, 13 per cent aboveAboveNets previous closing price.

But shares in AboveNet rose 14 percent to $84.45 after the announce-ment, indicating investors expected abetter offer.

AboveNet and Zayos businessmodel are closely aligned with a disci-plined focus on high bandwidth fibre- based communications services forenterprises, government and carriercustomers, said Dan Caruso, presi-dent and chief executive of ZayoGroup.

Bill LaPerch, president and chiefexecutive of AboveNet, added: Thecombination of AboveNets and Zayosassets creates a dense fibre footprintthroughout the US and Europe for abandwidth hungry world. This newcompany will be uniquely qualified tomeet the expanding needs of enter-prise and carrier customers.

As part of the transaction, GTCR, aleading Chicago-based private equity

firm, will make an equity investmentin Zayo.

The transaction is not subject to anyfinancing conditions. Morgan StanleySenior Funding and Barclays havecommitted to provide Zayo Group with sufficient committed debtfinancing.

The agreement contains a 30-daygo-shop provision, in whichAboveNet has the right to solicit andenter into discussions with respect toalternative acquisition proposals until17 April.

As far as looking at prime metrofibre assets, AboveNet is head andshoulders above any of the little com-panies that [Zayo] can look at, analystDonna Jaegers of brokerage DADavidson & Co said.

JP Morgan acted as lead financialadvisor to AboveNet, with Moelis act-ing as co-adviser.

Wiggin and Dana LLP is serving asAboveNets legal adviser. Willkie Farr& Gallagher LLP is serving as legalcounsel to AboveNets board of direc-tors.

Latham & Watkins LLP and GibsonDunn & Crutcher LLP are serving asGTCRs and Zayos legal advisers,respectively.

Zayo agrees

$2.2bn dealfor AboveNetBYHARRY BANKS

TECHNOLOGY

Dan Caruso, thepresident and chiefexecutive of ZayoGroup, said yester-day that he haslong admiredAboveNets busi-ness model andthat the combina-tion will createvalue for cus-tomers, employees

and investors.

Private PropertyFinanceIndividuals, companies, SPVs etc.We will arrange funding for you

from 30k to 20m.A quick and true alternative

to slow bank funding.

Soho Corporate

0208 123 2151www.sohocorporate.co.ukSteven McColl Investment Partner at Soho Corporate.


MORE NEWSONLINE ATwww.cityam.com

India set to boycott EUsairline carbon tax plans

INDIA is poised to pull its airlines outof the controversial EU emissionstrading scheme, a senior official saidyesterday, in what would be an escala-tion of a row over the EUs unilateralmove to charge for carbon emitted byflights in and out of Europe.

China barred its airlines from par-ticipating in the European scheme,which is meant to reduce emissions,in February.

The Indian official, with direct

knowledge of talks between the EUand other countries on the issue, said

India will soon ask local airlines notto share emissions data with the blocor buy any carbon credits.

If the EU retaliates by suspendingIndian airlines from flying to Europe,India would make similar moves andconsider charging an unreasonableamount for flying over India, the offi-cial said yesterday.

The questions is, are you provok-ing the world into a trade war? theofficial said.

India could also follow in Chinasfootsteps by cancelling orders for

Airbus planes in protest at theEuropean taxes, he added.

TRANSPORT

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ENDACE, a network monitoring solu-tions group, warned yesterday that itsrevenues for the year to the end of thisMarch would be 10 per cent short ofexpectations.

The group blamed economic uncer-tainty and slow decision-making by anumber of clients. It said that limitedbudgets, especially in the UK govern-ment customer base, had resulted in ashortfall of expected orders.

It said that pre-tax profits afteradjusting for share options wouldcome in at around $1m (630,000).

Earlier this year the board appointedDeutsche Bank to review its options.

GAS meter specialist Energy Assetshas launched a 15m fundraising in arare boost to the f lagging IPO market.

The company, which provides high-tech software to enable industrialand commercial companies to moni-tor their energy usage more accurate-ly, is in line to be given a main listingon the FTSE on Thursday.

Collins Stewart and MacquarieCapital are acting as joint bookrun-ners for the float.

The prospectus was issued yester-day and the fundraising, pegged at2.10 per share, is fully subscribed,

Energy Assets chief executive PhilBellamy-Lee said: Our business hasgrown quickly and we are findingstrong demand.

Companies are watching theirenergy consumption closely and weoffer them a detailed run down oftheir consumption. In these difficulttimes the more they can save, the bet-ter.

With the oil and gas market as itis it wouldnt be surprising to seeother companies go for an IPO.

The companys clients include a

whisky distillery in Scotland and itsservices involve linking up clientswith energy providers and advisingon installation.

The European market for flotationsslumped further in the final threemonths of last year, driven by turmoilin the single currency area, accordingto PwC data.

London remained the best per-former thanks to the Polymetal list-ing led the way, raising 491m(421m).

However, investment banking feesfell six per cent in 2011 to levels seenin 2009 as a fall-off in equity marketactivity and stalled M&A marketshurt their businesses over the year,figures from Dealogic showed

Bellamy-Lee added: We have seen avery positive response [to the IPO].

In the short term we are lookingfor organic growth but may look atacquisitions later.

With the IPO we can grow thebusiness.

The company has 60,000 metersand 20,000 data loggers in businessesacross the globe.

The group had revenue of 9.6mfor the year to 31 March 2011. Thegroups profit was 2.3m.

Float to fuel

new EnergyAssets era

OWNERS of the New York Mets base-ball team have agreed to pay $162m(101.9m) to settle a lawsuit by thetrustee seeking money for victims ofBernard Madoffs fraud, just before atrial was scheduled to begin.

The settlement was announced inManhattan federal court by US districtjudge Jed Rakoff yesterday. Payments

by the team are expected to occur overseveral years.Irving Picard, the court-appointed

trustee, had accused Mets owners Fred Wilpon and Saul Katz of ignoringwarning signs that Madoff was run-ning a fraud during their 25 years ofinvesting with him.

The owners countered that they didnot know Madoff was running a Ponzischeme. The money does not have tobe paid back for three years.

New York Mets inMadoff settlement

FINANCIAL services group Arbuthnot has sold its Swiss sub-sidiary to Ducartis for SFr2m(1.38m) in cash, netting a profit of800,000.

The group said in a statement thatit had set up Arbuthnot AG to devel-op a Swiss banking subsidiary for thefirm, but in light of the offer madeby Swiss firm Ducartis, it no longerwishes to proceed with this project.

It will instead use the proceeds ofthe sale to expand its private bank-ing arm Arbuthnot Latham, as well

as Secure Trust Bank, its retail bank-ing business.

Arbuthnot sellsSwiss businessEndace to missits profit target

BY JOHN DUNNE

ENERGY

TECHNOLOGY

BANKING

Energy Assets chiefexecutive PhilBellamy-Lee is hop-ing the IPO willprovide a platformfor growth

BYHARRY BANKSLEGAL


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EXILLON Energy said yesterday itsfull-year loss widened as the posi-tive effects of increased productionand higher crude prices were offset by a foreign exchange loss and aloss on disposal of non-currentassets.

The Russia-focused oil produceralso pushed back its expectation ofachieving a production level of17,000 barrels per day (bpd) to theend of 2012, from a prior forecast ofreaching this target by the end ofJune 2012.

This delay has been caused by anumber of operational difficulties,including slower-than-expectedmobilisation of rigs, Exillon said ina statement.

The firm, with operations in twooil-rich regions of northern Russia, Timan-Pechora and West Siberia,said average production in Februarywas 11,584 bpd.

For 2011, average daily oil produc-tion had increased 90 per cent to8,884 bpd. For the full-year, Exillonreported a pre-tax loss of $7.1m(4.4bn), compared with a pre-taxloss of $3.7m a year earlier.

It said in a statement: The posi-

tive effect of increased productionand higher crude prices was offset

by growth in depreciation anddepletion, foreign exchange lossand loss on disposal of non-currentassets. Despite these losses, thegroup continues to be well fundedand able to finance its ongoingoperational programme.

The FTSE 250 company recorded aforeign exchange loss of $6.7m fromthe revaluation of foreign currencymonetary items during the year.

The companys shares fell six percent following the announcement.But chief executive Mark Martinsaid the firm increased oil produc-tion by 90 per cent and underlyingearnings by 314 per cent.

During 2012 we intend to contin-ue to invest in order to achieve fur-ther increases in production,EBITDA and reserves.

Capital investments during the year was $97.3m compared with$48m in 2010.

SHARES in oil company WessexExploration soared more than 30 percent yesterday after French majorTotal said it is looking to buy the com-pany for around 71m.

Total confirmed it has made an

approach with a potential cash offerto buy the company for 10p a share.

Wessex owns a 1.25 per cent inter-est in a venture in French Guiana,where a large oil discovery was madelast year.

The other partners in the Zaedyusoil discovery are Tullow Oil and Shell.Total is already the largest stakehold-er with a 45 per cent interest. Analysts believe the discovery in

September has the potential for mil-lions of barrels.

Total will have until 16 April todecide whether to lodge a formal bidunder market rules.

A statement from Wessex said:The board of directors of Wessex hasconfirmed that in the absence of ahigher competing offer and subject toshareholder consultation it wouldcurrently be minded to give its rec-

ommendation should a firm offer bemade at this price by Total.

Wessex shares surge as Total lines upbid to snap up more assets in Guiana

DUN & Bradstreet, a global businessinformation firm, said some of itslocal employees in China may have violated US anti-bribery laws andhas suspended operations at one ofits local units pending an inquiry.

The company said it is investigat-ing allegations that data collectionpractices at Shanghai Roadway D&BMarketing Services, which it formedin 2009, may violate Chinese con-sumer data privacy laws.

State television said the Shanghaiunit had private information,

including income levels, job titlesand addresses for some 150mChinese residents and had sold individuals details for 1.5 yuan (23cents) each to companies involvedin marketing or phone sales, theShanghai Daily reported yesterday.

Shanghai police confiscated fourcomputer servers at the units head-quarters and questioned three sen-ior executives, the newspaper saidyesterday.

D&B shuts Shanghai unitin privacy investigation

INFORMATION

THE UNDERSEA cable unit of IndiasReliance Communications hasapplied to list in Singapore, twosources with direct knowledge of thematter said yesterday, potentially rais-ing between $1bn and $1.5bn to helpits parent pare a heavy debt burden.

The unit will list as a business trustand has been keen to raise up to$1.5bn in what is set to be Singapores

biggest IPO of the year, but sourcesinvolved in the process have said

$1bn is a more realistic target. A successful offering would be a

major relief for beleaguered RelianceCommunications, which has seen itsfair share of failed deals. Indias sec-ond mobile operator, controlled bybillionaire Anil Ambani, is strugglingwith $6.9bn in debt and has postedten straight quarters of profit declineamid fierce competition.

The IPO is likely to be launched inthe second quarter of 2012, said the

sources, asking not to be identified.Sources have said previously that

Reliance Communications plans tosell 75 per cent of the wholly ownedunit in the offer.

The unit, which has hired StandardChartered and Deutsche Bank as itsmain advisers for the offer, appliedfor the listing last week and is waitingfor the Singapore Stock Exchangesapproval before it makes plans pub-lic, the sources said.

Another source said Industrial andCommercial Bank of China may have

a bookrunner role in the offer. ICBCwas not available for a comment.

Cable unit of Indias Reliance looks intoa $1bn-plus Singapore market listing

CAPITAL MARKETS

EUROPEAN retail giant Carrefour isto temporarily close one of its stores

in China, a local government officialsaid yesterday, days after state mediasaid the chain was passing off regu-lar chicken as free-range meat.

The closure is the latest case ofChinese officials cracking down onforeign brands and comes after foodsafety authorities said last week theywere investigating a Beijing branchof McDonalds, the worlds biggesthamburger chain, after reports ofquality problems there.

State media had reported that theCarrefour store in the capital ofHenan province, Zhengzhou, had been selling meat with expiredfreshness dates and mislabelled ordi-

nary chicken as free-range chicken.According to the law on protec-tion of consumer rights and inter-ests, our office on 18 March issuedan order for Carrefours Huayuanbranch to cease and reorganise oper-ations, an official at the local indus-try and commerce department said,reading a statement.

After reorganisation is completedto meet standards, it can resumeoperations, she said, without giving

further details.Repeated calls to Carrefours

China office yesterday went unan-swered.

Carrefour China earlier had post-

ed an apology for the incident on itsChinese-language website, sayingthe company was taking immediatemeasures to resolve the food safetyissues.

Carrefour China attaches greatimportance to...reports of fresh foodproduct quality management at theZhengzhou Huayuan store and sin-cerely apologises for any impact orlosses suffered by consumers, thestatement said.

Carrefour closes China storeBYHARRY BANKS

RETAIL

Exillon losses

widen due tocurrency hitsBYHARRY BANKS

ENERGY

BY JOHN DUNNE

ENERGY


Reliance Communications, led by Anil Ambani, has debts of nearly $7bn Picture: GETTY

Rothschild is advising Total on its bidfor Wessex Exploration.

James Smith, director of the oil andgas team at Rothschild, is leading onthe deal. He joined the company in2008, and his expertise lies mainly inM&A deals involving energy and fossilfuels, having worked for the global oil

and gas advisory boutique Harrison

Lovegrove and for Merrill Lynch as anoil and gas specialist.

He advised oil company Cairn onthe sale of its Indian operations toVedanta Resources, which was com-pleted late last year.

Roger Ader, a managing director atRothschild, is also working on the deal.

WH Ireland is advising Wessex,which is waiting to see if Total willmake a formal bid. John Wakefieldand Marc Davies are leading the teamfrom the firm.

Oxford-educated Davies was previ-ously at Blue Oar Securities as a cor-porate finance specialist and worked

in business recovery at PwC.

ADVISERS: ROTHSCHILD

JAMES SMITH

AND ROGER ADER

ANALYSIS l Exillon Energy PLC


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Merchant SecuritiesThe financial services group hasannounced the appointment of Dr RobinCampbell as head of life sciences equity

research. Campbell has spent overtwenty years as an equity analyst in thelife sciences sector, and also has tenyears experience in pharmaceuticals.

BTIGThe European affiliate of the globalfinancial services firm has hiredMatthew Cyzer as president and headof European equities. Cyzer is formerpartner and head of European equity

sales trading at Goldman Sachs inLondon, and will spearhead the furtherexpansion of BTIGs European business.Cyzer was also formerly head ofEuropean equity salestrading atDeutsche Bank. He began his career inequity sales at NatWest Markets.

Thomson LocalPaolo Giuri has been appointed chiefexecutive of the local media company.

He replaces Elio Schiavo, who willbecome chief executive of ThomsonLocals German-based sister company,Telegate. Giuri joins the company fromEuropages, Europes leading business-to-business online directory, where hewill continue to hold the position of

chief executive. Schiavo will stay on inhis role as chairman of ThomsonDirectories.

Eden FinancialVictor Polak has joined Eden Financial,the asset management firm, as seniorinvestment director. He will be provid-ing services to Edens ultra-high-net-worth clients and family offices. Polaksexperience in wealth management

dates back to 1995 and he has spentthe past twelve years with leading USinvestment banks, most recently as sen-ior vice president at Merrill Lynch.

ChargemasterEuropes leading provider of electric

vehicle charging infrastructure hasannounced the appointment of MichaelBrooks as finance director with immedi-ate effect. Brooks served as financedirector of Loans.co.uk from 2001 untilits sale to a major US bank in 2006.Most recently he owned MJ Brooks, afinancial consultancy. He started hiscareer at Mercer & Hole, and has heldpositions at AIB Govett and NatWestCorporate Banking Services.

CITY MOVES | WHOS SWITCHING JOBS Edited by Tom Welsh

+44 (0)20 7092 0053morganmckinley.com

To appear in CITYMOVESplease email your careerupdates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

Wall St buoyed byApple divi scheme

THE S&P 500 extended its rally

yesterday to climb within 10 percent of its historic closing high,after Apple said it would pay a

$10bn annual dividend and buy backstock.

The benchmark index is now at itshighest level since May 2008 and 10per cent below the record close of1,565.15 set in October 2007.

This is the type of thing that typi-cally gets retail investors back in themarket, said Peter Jankovskis, co-chief investment officer at OakBrookInvestments in Lisle, Illinois.

Analysts have said a flow of retailinvestor money could fuel the nextleg of the rally that has driven theS&P 500 up 12 per cent so far thisyear.

Apple, the worlds most valuablepublicly traded company, rose 2.7 percent to $601.10 marking the firsttime the stock has ended above $600 -and inching closer to a 50 per centgain this quarter.

The announcement from Applethat it will pay a dividend of $2.65 ashare quarterly from July comes less

than a week after major US banksresponded to the results of the

Federal Reserves stress tests byannouncing bigger dividends and bil-lions of dollars in stock buybacks.

These increases, alongside a steadystream of upbeat US economic data,have cleared the way for more invest-ment in stocks.

Youre getting initiations andincreases in dividends, and people arestarting to recognize there is nowhereelse to go, said Jack de Gan, chiefinvestment officer at Harbor Advisoryin New Hampshire.

An S&P index of small-cap stocks

closed at an all-time high, while anindex of midcap shares, near theirrecord high, confirmed the broad-based nature of the US equities rally.

Financials were the second-best per-forming among the top 10 S&P 500sectors, ranking only behind the techsector. The S&P financial indexgained 0.6 per cent.

The Dow Jones industrial averageedged up 6.51 points, or 0.05 per cent,to 13,239.13 at the close. The S&P 500Index gained 5.58 points, or 0.40 percent, to 1,409.75. The NasdaqComposite rose 23.06 points, or 0.75per cent, to 3,078.32.

UBS raised its price target for USSteels stock by almost 24 per cent,attracting a blitz of investor atten-tion, and the hard metal maker'sshares jumped 6.4 per cent to $31.64.

United Parcel Service rose 2.8 percent to $81.11 as it clinched a deal to

buy Dutch peer TNT Express, makingUPS the market leader in Europe.

BRITAINS top shares eased backfrom last weeks 2012 highs yesterday, as weakness inbanks after recent strong gains

overshadowed a late-session recoveryfrom miners, with investors awaitingthe next catalyst to drive the market.

The benchmark FTSE 100 indexclosed down 4.47 points, or 0.1 percent, at 5,961.11.

Banks, which spearheaded theFTSE 100s recent jolt higher in theaftermath of last Tuesdays US bankstress tests, went into retreat afterLondon-listed lenders neared over-bought levels, according to their rel-ative strength index.

Banks last week outperformed theother major sector indexes on theFTSE 100 by a considerable margin,advancing 5.2 per cent.

Sentiment in the sector was hurtas KPMG said banks faced more pres-sure on profits, and Barclays Capitalforecast investment banking earn-ings to be down 15-20 per cent thisyear.

Mining stocks clawed back lossesfrom earlier in the day to end in pos-itive territory, tracking copper prices

higher, as recent encouraging USeconomic data overshadowed fears

about demand from top consumerChina, for now.

Hurting the miners, the key prop-erty sector in China has cooled. Itshome prices are do

cityam 2012-03-20

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