Mark Kleinman is Sky News’ City Editor and is the man who gets the Square Mile talking in his weekly City A.M. column. This week he tackles splashy Telegraph stories, Legal & General’s spring cleaning and the tax hike fears
Black comeback would be a tall Telegraph tale
Hold the front page: do comebacks arrive any more startlingly than this? Lord Black of Crossharbour, previously known as plain old Conrad Black, cannot have harboured much hope of returning one day to The Daily Telegraph during his dark days of incarceration.
Whether he does or not is still an open question, but the prospect of such a renaissance is too delicious for media industry obsessive to discount easily. The New York Sun, a digital-only newspaper owned by Dovid Efune, counts Lord Black as a founding director and contributing editor.
Despite being modest in revenue terms, it has grand ambitions. Last week, Anna Jones, the chief executive of Telegraph Media Group, informed staff that Efune was one of two parties to whom management presentations have been made in recent weeks.
Sources say Efune articulated an ambitious vision to establish a centre-right global media group, of which the Telegraph would form a central crux.
He is reportedly backed by investors as deep-pocketed as Oaktree Capital and advised by bankers as august as Liontree. According to one insider, his bid is credible, and he has enough conviction to table a competitive bid ahead of the 27 September deadline set by Raine and Robey Warshaw, the bankers handling the process.
That will pit Efune against David Montgomery’s National World, which still needs to raise capital far in excess of its current market capitalisation, and possibly Sir Paul Marshall’s Old Queen Street Ventures, which bought The Spectator last week for £100m.
That price was roughly 40 times EBITDA – extrapolate that to the Telegraph and you’d be looking at a purchase price of about £2bn. That figure is, of course, more tabloid fantasy than broadsheet reality, but it reflects RedBird IMI’s growing conviction that it will make an unlikely profit on its brief foray into Britain’s national news media.
With Nadhim Zahawi, the former Chancellor, still hovering on the edges of the auction, it now looks more plausible that at least one bid for the Telegraph will come in at, or at least close to, the £500m break-even threshold.
Were Lord Black to form part of the triumphant consortium, that really would be a story worthy of a Telegraph splash.
L&G’s new housekeeper Simoes hunts new deal for fintech
Antonio Simoes is in housekeeping mode. The new boss of Legal & General (L&G), who took over from Sir Nigel Wilson earlier this year, has already made disciplined simplification his mantra.
Cala Group, the housebuilder, is the biggest of the assets in receipt of Simoes’ early tidying-up treatment, with a £1.3bn deal struck this week with a consortium comprising Sixth Street and Cala’s former owner, Patron Capital Partners.
Into a new non-core division of L&G has gone a smorgasbord of other holdings, one of which is the group’s stake in Salary Finance, a fintech which helps employees receive their wages in advance of their monthly due date.
L&G has been a long-standing backer of Salary Finance, initially investing about five years ago. Its stake is now effectively up for grabs, which was one of the motivating factors for the fintech to enter into merger discussions with Oakbrook, another fintech created out of the leading London digital venture-builder Blenheim Chalcot.
A deal would have created one of the UK’s biggest non-bank consumer lenders, with more than 200,000 customers and a £500m loan book.
Alas, word reaches me that the deal is off, with the shareholders unable to reach agreement on its terms. A sale of Salary Finance to another fintech or strategic acquirer looks like the likeliest outcome. Simoes’s spring clean (in autumn) must go on.
Bank fears of Budget tax raid may be overblown
Few things work the City into a frenzy more vigorously than the prospect of industry-targeted tax rises. With exactly six weeks to go before a Labour Chancellor’s first Budget statement for nearly 15 years, Britain’s banks, in particular, are on alert for another Treasury raid on their coffers.
The last two to hit them, specifically, were the politically understandable Bank Bonus Tax of 2010, engineered by the late Lord Darling, while his immediate successor, George Osborne, also used his early days in office to target the industry with his Bank Levy.
Reports have suggested in recent weeks that a further tax on banks would be aligned with Sir Keir Starmer’s remarks that “those with the broadest shoulders should bear the heavier burden”.
The UK banks, buoyed by the profitability which has accompanied higher interest rates, are not exactly in a position to plead poverty. That said, the costs of implementing ring-fencing reforms, strengthened capital rules and previous tax hikes have cost them tens of billions of pounds since the 2008 crisis.
I understand that the issue of tax rises was not even raised when Reeves met bank CEOs and Andrew Bailey, the Bank of England Governor, last week. That’s entirely proper: indications of specific tax increases should be notified through parliament, not at behind-closed-doors roundtables.
Yet while strains on the public finances are clear, it would be a mistake for Reeves to penalise Britain’s big lenders too heavily next month. As TheCityUK points out in its well-argued Budget submission, targeting the key enablers of economic growth with overt aggression would be mistaken.
If the Starmer government is as pro-growth as it claims to be, she will need to be more imaginative than that.