Inside Track: Cenkos is driving an AA float, but the handbrake is still on
YOU KNOW things are getting toppy when Cenkos is hawking accelerated IPOs around the City,” a fund manager told me over lunch last week.
While he said it half in jest, he had a point. The investment bank whose rainmakers pioneered the technique during their time at Collins Stewart are back in their old routine.
Succeeding with their latest deal might be akin to driving with the handbrake on, however. The Cenkos team wants to buy the AA, the roadside recovery group, by listing it on the stock market with the backing of a dozen or more City institutions.
The principal challenge, say those familiar with the proposal, is that the AA’s balance sheet is more highly-geared than a top-of-the-range sports car.
Carrying so much debt is a dangerous platform on which to take a company public. Insiders say the Cenkos plan contains aggressive assumptions about the AA’s ability to grow its share of the home emergency market.
There is also the complication of the AA’s parent, Acromas Holdings, being distracted by its efforts to float Saga in the next few months.
So the Cenkos plan may be an idea whose time has not yet come, rather than one which is obsolete.
But if they do manage to get it away, it would be an irony lost on neither bankers nor investors if it was a flotation of the AA which caused the listings market to break down.
CABLE NEEDS TO PICK HIS BATTLES
Perhaps the letter reminding Vince Cable that taxpayers no longer own a controlling interest in Royal Mail got lost in the post.
That’s a logical conclusion to draw from the bellicose rhetoric being expressed by those close to the business secretary in recent weeks.
His preoccupation? That Moya Greene, the company’s chief executive, and other senior managers should not receive pay rises above those awarded to the rest of its workforce. To recap, posties will get a three per cent hike this year as part of a deal struck by their employer and union.
Aides to Cable insist he is not spoiling for a fight with Royal Mail.
That isn’t the interpretation of some on the company’s board, who believe that he is engaged in an unedifying game designed to insulate his own position ahead of a withering report from the National Audit Office.
The coincidence of timing is obvious, given that the government stands accused of short-changing taxpayers by anything up to £2.5bn by privatising Royal Mail too cheaply.
In the context of such a sum, a few hundred thousand pounds to secure the services of a driven, modernising chief executive to bring her pay in line with peers feels like the wrong battle for Cable to be picking.
A STAR TURN FROM GUY HANDS
Private equity and box office aren’t usually mentioned in the same sentence, but Mansfield College, Oxford, on the evening of 7 May might overturn that sense of incongruity.
Six years after quitting the UK to move to Guernsey for tax reasons, Guy Hands is poised to make a public reappearance.
I’m told that the Terra Firma founder will be at the eponymous Hands Lecture, to be given this year by the US trial lawyer David Boies.
The choice of speaker shows Hands’ sense of mischief hasn’t faded. Boies acted for Terra Firma during the firm’s first attempt to sue Citi over its ill-fated purchase of EMI.
Round two will get underway in London, and Hands is expected to appear in person. Could his tax exile be coming to an end altogether?
Mark Kleinman is the City editor of Sky News @MarkKleinmanSky