Mark Kleinman: Britishvolt or British Steel? A tough political call
Britishvolt? No. British Steel? Yes (multiple times, albeit with conditions). Is there any more invidious task for Grant Shapps’ Whitehall department than picking winners – or at least picking non-losers?
At times, the process appears extraordinarily arbitrary, and certainly with little attachment to value-for-money criteria embedded in ministerial minds. Take the previous, heavily subsidised bailout of British Steel, the cleverly renamed Scunthorpe-based producer that is the UK’s second-largest player in the sector.
Jingye Group’s purchase of the company out of administration in 2020 came with all kinds of taxpayer support in return for assurances about the Chinese acquirer’s commitment to investing in the business. Mitigating circumstances such as the Covid pandemic notwithstanding, little of that funding commitment appears to have been delivered. So what better way to test Jingye’s mettle (forgive the steelmaking pun) than by doling out another £300m of public money to see if it can effect a transition to a greener British steel industry.
Mr Shapps (and Michael Gove, the levelling up secretary) had a point when they told Jeremy Hunt, the chancellor, in a recent letter that steel sovereignty remains economically important. From a pragmatist’s perspective, though, the argument that allowing British Steel to collapse again would crystallise financial liabilities for taxpayers equivalent to three times the scale of the latest rescue package is equally relevant.
Tata Steel, by far the biggest steelmaker in Britain, is receiving an identical package of funding, although whether that is sufficient to persuade the Indian parent to give the long-term guarantees that Shapps is looking for – and stick to them – remains unclear.
On the flip side of the investment coin is Britishvolt, the electric battery start-up hailed by ministers as recently as last year as a sign of the government’s prowess at harnessing the industries of the future. It remains a mystery as to why the company found it such a struggle to attract the private sector capital needed to unlock state support, but anecdotal evidence from inside Britishvolt suggests ministers were right not to offer a blank cheque.
That, though, may be precisely what they are doing in the case of British Steel and Tata Steel, where even medium-term commitments may come to look hopeless in the face of far greater global industrial forces. Shapps and co are likely to be long gone by then – as ever in politics, it will be someone else’s mess to clean up.
A boost for London’s IPO market?
Here’s one definition of optimism: a partnership aimed at promoting UK retail investor participation in IPOs and other equity and debt-raises. Yet while last year may have been a turgid one for London floats, and the outlook for 2023 is scarcely better, an alliance to be announced today between PrimaryBid, the pioneering UK fintech, and broker Winterflood Securities is focused on the long-term pipeline by targeting an improvement in the connectivity between the likes of AJ Bell, Hargreaves Lansdown and wealth managers.
Their collaboration will target a reduction in ‘frictional barriers’ that exist in retail capital-raising infrastructure, by making the process increasingly digital and potentially giving access to IPOs to nearly £300bn of uninvested cash ISA funds.
This would tap into one of the key themes of Freshfields lawyer Mark Austin’s secondary capital-raising review last year, which recommended that retail investors should not face exclusion from public company fundraisings. Separately, the financial ceiling on retail investor participation in such capital raises is poised to be eliminated this year through the Financial Services and Markets Bill.
UK floats have performed dismally for investors
None of this detracts from the fact that so many recent UK floats have performed dismally for investors. Regardless, arcane technology has no place in 21st century capital markets.
“PrimaryBid has the leading track-record in delivering retail access to IPOs and secondary fundraisings, and Winterflood has a 34-year history of developing innovative solutions to allow retail investors access to secondary market liquidity,” Alex Skrine, director and head of electronic trading at Winterflood, said: This endeavour brings together two leading market infrastructure providers with an ambition to digitise retail investor access to capital markets and ensure investors are treated fairly.”
“The future is clear: regulatory changes in both the UK and abroad mean that retail investors will play a more meaningful role in the public markets,” Anand Sambasivan, PrimaryBid chief executive, said. “But the ambitions of UK policymakers will only be realised if the underlying plumbing that broadcasts deals, captures retail demand and delivers allocations is upgraded.”
If the partnership pays off, expect PrimaryBid to continue its journey towards becoming Britain’s next fintech unicorn.
Cheque’s in the Postings
Who’s the most surprising new entrant to the ranks of Britain’s banking millionaires? This year’s UK results season is still weeks away, but one lucky beneficiary already has his bonus letter. I understand that David Postings, UK Finance’s chief executive, who has just been handed the maximum potential bonus of about £500,000 by the banking lobby group’s remuneration committee – adding to his base salary of £500,000.
Postings is regarded by members to have done a decent job since taking over during the pandemic, helping the industry navigate the impact of Russian sanctions last year. Undoubtedly, though, it has been less intense than the existential challenges which landed in the laps of predecessors Angela Knight and Anthony Browne.
His generous package still won’t make Postings the City’s best-paid trade association chief, however. Chris Cummings, chief executive of the Investment Association, collected a pay package worth about £1.1m in 2021, as I reported here last year.
Inflation is everywhere these days, it seems.
Mark Kleinman is City Editor at Sky News and writes a fortnightly column for City A.M.