Here’s an interesting business on its way to the stock market to raise £190m. Pure Gym is chaired by Tony Ball, who as chief executive of BSkyB in its early years helped to change television viewing habits in the UK. The gym chain is another tale of “disruption”, promises Ball, which might encourage some of the 785,000 members to think of backing the IPO, or flotation, with a few quid. Forget it, unless you are a gym-goer who is also a fund manager.
Yes, this IPO is another dreary institutions-only offering, which is par for the course when, as here, the seller comes from the land of private equity. Ordinary investors’ first chance to buy arrives only when the shares start trading. Worse, the whole IPO process could almost be designed to discourage general interest.
If you wish to chew over Pure Gym’s financial numbers at leisure, for example, you’re a second-class citizen. The institutional crew will get their “pathfinder” prospectus, which includes all the important data, well in advance. Outsiders’ first sight will come when the full version is published a couple of days before the float actually happens.
In the meantime, ordinary mortals must make do with edited highlights. There were interesting lines in Wednesday’s intention-to-float document, like the fact that Pure Gym claims a 47% return on capital at its “mature” gyms. But you will search in vain for up-to-date figures for pre-tax profit or even debt. Nobody could sensibly make an investment decision without those numbers.
The real culprit is the Financial Conduct Authority and its predecessor, which over two decades has allowed retail punters to be squeezed out of the IPO game. Back in April, the regulator discussed some sensible reforms. Prospectuses could be published a fortnight before trading day, suggested the FCA, and independent analysts should not be gagged by lack of access to management.
Five months later there is no sign of the FCA leaping into action. Those politicians who say from time to time that they want to promote a “shareholding democracy” should start by telling the FCA to pull its finger out.
Banks won’t be hurried over Brexit decisions
The European commission president, Jean-Claude Juncker, trying to hurry things along and get the Brexit show on the road, clearly hasn’t met many British bankers.
Douglas Flint, chairman of HSBC, and Alex Wilmot-Sitwell, head of the European end of Bank of America Merrill Lynch, are not chaps who like to be rushed. Solemnly, and in turns, they told the House of Lords on Wednesday that upending the European financial services industry can’t be done lightly, quickly, or at all without risking serious instability.
The cheerful interpretation, from the point of view of the City, is that a lot of jobs look safer than when some banks were threatening an exodus if the UK voted for Brexit.
Big banks are so inflexible, it seems, that change throws them into confusion. That is easy to believe. The big four lenders were given half a decade to erect a ringfence around their retail operations in the UK and still they grumble about the pace of regulatory upheaval. Or, as Flint himself put it, it’s taken HSBC three years to move 1,000 jobs from London to Birmingham, so switching to Paris would be a “non-trivial” undertaking.
But Flint and Wilmot-Sitwell were not speaking out of patriotism. They were making the serious – and surely correct – point that both the UK and the EU would suffer if the European financial system is rejigged overnight. Frankfurt and Paris simply aren’t in a position to perform London’s pan-European role. If the financial services industry is forced to jump through too many new licensing hoops too quickly, it could fail in its day job of lending.
That point is understood in the UK, as you’d expect, so Flint and Wilmot-Sitwell need to preach to the non-converted. They’ll never persuade François Hollande, who wants euro-denominated trades to be cleared in the eurozone, that it is in France’s own interests not to wreck the City. But HSBC and co could do everyone a service by prodding their big corporate clients on the continent to speak up.
It’s now up to PM to reduce the cost of her Hinkley Point mistake
It is too late, it seems, to persuade Theresa May that Hinkley Point is a colossal waste of money. But, at a bare minimum, let’s hope the prime minister has succeeded in reducing the scandalous cost to consumers. EDF and its Chinese backers could expect to make a 10% rate of return under the old terms agreed in 2012. In today’s world, 7% would be generous.
