MegaFon prices London IPO at bottom of range
Russian telephone network MegaFon this morning priced its London flotation at the bottom of a $20-$25 range, valuing the firm at $11.1bn (£6.9bn).
The business is controlled by Russia’s richest man Alisher Usmanov, the part-owner of Arsenal football club.
The float will raise $1.7bn with an initial free float of 15.2 per cent of shares. The low price partly reflects concerns about corporate governance standards at MegaFon, which caused Goldman Sachs to quit the IPO last month.
The deal will be one of the biggest London floats this year in what has been a sparse 12 months for the capital’s IPO market.
Profits rise at All Bar One owner
Pub and restaurant chain Mitchells & Butlers has announced better-than-expected full-year profits, boosted by improved food sales.
The company operates brands including All Bar One, O’Neills and Toby Carvery, serving 130m meals and 420m drinks each year.
Adjusted pre-tax profits for the year to 22 September rose to £162m from £156m, while like-for-like sales were up 2.1 per cent.
“This year we have initiated a significant cultural change programme focused on streamlining internal processes and placing the guest at the heart of everything we do,” said non-executive chairman Bob Ivell.
“We have restructured the way we support our operations teams, reduced our central costs and increased the accountability of our senior executives for their brands.”
Argentina fights to stave off default
Argentina has begun proceedings to fight against a US court order that risks plunging the country into default,
The court has ordered Argentina to repay bondholders – led by US hedge funds – who in 2005 and 2010 refused to swap defaulted debt for bonds that paid a lower rate.
But bondholders who did accept the swaps have filed for a temporary stay on the court’s ruling, amid fears they may not get paid if the ruling is implemented.
Argentina’s finance minister yesterday called the court’s decision “an attack on sovereignty that shows ignorance of the laws passed by our Congress”.
If nothing changes then Argentina could be pushed into a technical default in the next few weeks.
Mark Carney appointed as governor of the Bank of England
Mark Carney has been unveiled as the surprise choice to lead the Bank of England, chancellor George Osborne announced today.
He will quit his current job as Bank of Canada governor to take charge at Threadneedle Street when Sir Mervyn King steps down on 1 July 2013.
The decision to appoint an outsider from overseas was unexpected but Osborne insisted that Carney is “acknowledged as the outstanding central banker of his generation”.
Carney, 47, is a former Goldman Sachs banker who was educated at Harvard and Oxford. He beat stiff competition from the likes of deputy governor Paul Tucker.
Betfair quits Greek gambling market
BRITISH betting exchange Betfair has quit the Greek marketplace, citing regulatory uncertainty over gambling law in the cash-strapped country.
The company said it had previously operated in Greece without a local permit as they “consider the gambling legislation in the country to be inconsistent with European law”.
However earlier this month the Greek gambling commission threatened criminal charges and financial penalties if betting firms operate in the country without permission.
Betfair said the threatened charges – which may include payment of taxes on historical revenues – made the market economically unviable.
Greece had been expected to provide Betfair with £13m of revenue and £7m profits this financial year.
GSK makes £580m investment in India
British pharmaceutical firm GSK is to raise its investment in India by buying $940m (£586m) of shares in its local venture – thanks to the success of Horlicks.
The decision is a vote of confidence in the enormous emerging market and signifies a move away from GSK’s traditional prescription drugs market.
The company said it plans to increase its stake in GlaxoSmithKline Consumer Healthcare from 43.2 per cent to 75 per cent, the maximum allowed before the local firm has to be delisted.
Financial growth at the Indian business is mainly driven by its ownership of the Horlicks brand. The malted hot drink was introduced to the subcontinent in the days of the British Raj but has remained popular, spawning a range of Horlicks-branded consumer goods.
UBS fined £30m over Adoboli fraud
SWISS bank UBS has been fined almost £30m by the Financial Services Authority (FSA) after admitting to serious failures relating to its handling of the Kweku Adoboli fraud case.
The regulator fined the company £29.7m for serious weaknesses in its internal controls that should have stopped the rogue trader from running up unauthorised losses of $2.3bn in 2011.
Last week Adoboli was found guilty of two cases of fraud and sent to prison for seven years.
The FSA found there were particular flaws with UBS’ computerised systems and said there was a lack of concern from other parts of the business when Adoboli began reporting unusual trading patterns.
“UBS failed to question the increasing revenue of the desk and failed to ensure that there was a corresponding increase in the controls in place over the desk,” said Tracey McDermott, director of enforcement and financial crime at the FSA. “As a result Adoboli, a relatively junior trader, was allowed to take vast and risky market positions, and UBS failed to manage the risks around that properly”
The fine would have been 30 per cent higher if UBS had not agreed to settle at an early stage. The bank has also agreed to invest £16m in a programme of remedial action.
KPMG to cut hundreds of UK staff
KPMG has told staff it is planning hundreds of redundancies, with up to three per cent of its UK headcount at risk, City A.M. has learned.
The firm is the only one the Big Four professional services firms to embark upon a redundancy programme in recent years.
“KPMG continues to grow its UK business in a subdued economy and fast-changing marketplace,” the company said in an email to staff.
“However, we have taken a hard look at our operations to ensure that we stay best positioned to continue providing the best services to our clients as efficiently as possible.”
A review into the scale of the cuts is ongoing and precise numbers have not been decided, but KPMG says it expects the roles at risk to total less than three per cent of its UK staff.
It is understood that partners are not included within the scope of the review, which is looking at a number of business units including audit.
Other professional services firms are not thought to have formal redundancy programmes in place at present.
The last time the Big Four made large-scale cuts was in the wake of the 2008 financial crisis.
“Clearly, any redundancy situation is regrettable – and KPMG will make every effort to redeploy individuals within the firm whose roles are ‘at risk’,” the firm added in its email.
*Amended to make clear that partners are not included in the scope of this review.
Man Utd unveil IPO in New York to pay off debts
MANCHESTER United last night filed documents for an initial public offering (IPO) of shares to be sold on the New York Stock Exchange.
The size of the offering has initially been listed at $100m yet analysts expect that the figure could change significantly, with the price and quantity of shares yet to be decided.
The club also revealed that it will become part of a holding company based in the Cayman Islands, a move likely to provoke more anger among fans disgruntled with the controversial Glazer family owners.
Documents filed with the Securities and Exchange Commission (SEC) in the US state that the company is issuing shares to help cope with its £423.3m debts.
Underwriting the IPO will be Jefferies, Credit Suisse, JP Morgan, Deutsche Bank and Bank of America Merrill Lynch.
“Our indebtedness could aversely affect our health and competitive position,” the filing states, adding: “We intend to use all of our net proceeds from this offering to reduce our indebtedness.”
New Class A shares will be issued by the IPO, which will only carry one vote per share. The remaining Class B shares, owned entirely by the Glazers, will carry ten votes per share.
Duncan Drasdo of the Manchester United Supporters’ Trust told City A.M. that without fair voting rights the share issue won’t allow the Glazers to be held to account by any fans that wish to buy into the new stock.
Barclays fined £290m in Libor settlement as Diamond loses bonus
Barclays bank will pay at least $450m (£288m) to US and British authorities to settle a probe into manipulation of the Libor interbank lending rate.
Regulators have been investigating allegations that several banks, including Barclays, sought to manipulate the London Interbank Lending Rate (Libor), which underpins trillions of dollars of derivatives contracts worldwide and is also widely used as a reference rate for corporate lending.
The US Commodity Futures Trading Commission said Barclays attempted to manipulated Libor submissions “sometimes on a daily basis” over a four-year period starting in 2005.
The fines will be paid to the US Department of Justice, the US Commodities Futures and Trading Commission and Britain’s Financial Services Authority (FSA).
The FSA will receive £59.5m, the largest fine it has ever issued.
As a result of the payout Barclays chief executive Bob Diamond has agreed to give up his bonus for 2012.