News Column

TOP NEWS: Lloyds Price TSB IPO Below Book Value

June 9, 2014



LONDON (Alliance News) - The following is a summary of top news stories Monday.

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COMPANIES

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Lloyds Banking Group set the price range of the initial public offering of TSB Banking Group PLC on the London Stock Exchange at between 220 pence to 290 pence per share, which would value the spun-off retail bank at about GBP1.28 billion at the mid-point of the range. In a statement, Lloyds said it expects to offer 125.0 million TSB shares to investors, representing a quarter of the bank's shares. However, with TSB's book, or net asset value, at about GBP1.50 billion, Lloyds is set to sell the shares at at least a small discount - 15% at the mid-range of the proposed pricing - amid signs of cooling investor appetite for IPOs.

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Sports Direct International said it is once again seeking shareholder approval for a bonus share scheme for executives, including founder and Deputy Chairman Mike Ashley, which could net them up to 25 million new shares contingent on performance targets. The new shares would represent about 4.2% of the company and be worth GBP204.1 million in total at current prices. Ashley holds 57.71% of Sports Direct shares, after selling a 4% interest in the company for GBP204 million in April. The company said that Ashley's invitation to participate in the scheme reflected the fact that he has received "no remuneration for his substantial contribution to the company since its initial public offering in February 2007" and the fact that he is not participating in the 2011 executive bonus share scheme.

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Man Group said it is to acquire Pine Grove Asset Management LLC, a fund of funds manager with about USD1.0 billion in assets under management. Pine Grove Asset Management, founded in 1994 and currently owned by its employees, is a fund of hedge funds manager that specialises in managing credit-focused hedge fund portfolios. Man Group said that Pine Grove has delivered attractive risk-adjusted returns across market cycles since its inception. The hedge fund did not disclose the financial details of the transaction, which is expected to close in the third-quarter, but a person familiar with the deal told Alliance News it is not material, adding that further information is expected with Man Group's first-half results.

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Carillion said that its 50:50 joint venture with Lafarge Tarmac has won a highways maintenance and construction framework deal worth about GBP100 million from The Midlands Highway Alliance, a civil engineering and road schemes buying collaboration between about 20 local authorities. The deal is for three years, and the Alliance has the option to extend it for a further year. Works covered by the deal include the reconfiguration of highway layouts, construction of road and bridgeworks, resurfacing and associated enabling works, said Carillion.

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EE is poised to pull out of its relationship with Carphone Warehouse Group in a move that threatens the retailer's GBP3.6 billion merger with Dixons Retail, The Telegraph reported at the weekend. EE, a joint venture between Orange SA and Deutsche Telekom AG, is reviewing its consumer retail strategy, with a conclusion due "within weeks," and a complete withdrawal from Carphone Warehouse the potential results, the newspaper said. Deputy Chief Executive of Orange Gervais Pellissier urged EE to "get rid" of third party retailers and deal with customers directly last week, the report said. The review will also look at EE's relationship with Phones4U LLC, and the report said EE would end its relationship with one or the other, or both. A spokesperson for EE told Alliance News that its review of its distribution strategy and talks with "all relevant parties" are continuing.

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MARKETS

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The FTSE 100 is modestly higher, as investor sentiment remains broadly positive after a strong US jobs report on Friday, followed by some better Chinese data over the weekend and an upward revision to Japan's GDP.

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FTSE 100: up 0.2% at 6,871.72

FTSE 250: down 0.2% at 16,200.40

AIM ALL-SHARE: flat at 805.22

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The euro has dropped against the dollar after data showed investor confidence in the Eurozone falling to a six month low.

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GBP-USD: flat at USD1.6808

EUR-USD: down at USD1.3622



GOLD: up at USD1,255.46 per ounce

OIL (Brent): up at USD109.03 a barrel



(changes since end of previous GMT day)

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ECONOMICS AND GENERAL

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Eurozone investor confidence weakened for the second straight month in June, to the lowest since December 2013, survey results from the think tank Sentix showed. The investor sentiment index fell unexpectedly to 8.5 in June, the lowest since December 2013, from 12.8 in May. The score was forecast to rise to 13 in June.

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China's imports fell 1.6% year-on-year to 160 billion dollars in May, the government announced Sunday. Imports in April had risen 0.8%, up from March's 11.3% decline. Exports were valued at USD196 billion, up 7% year-on-year, customs data showed. Exports rose 0.9% in April, recovering from March's decline of 6.6%. Total foreign trade volume increased 3% to USD355 billion, the General Administration of Customs reported. The trade surplus for the month stood at USD36 billion.

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Confidence among Japan households improved more-than-expected in May, monthly survey data from Cabinet Office showed. The consumer confidence index rose to a seasonally adjusted 39.3 in May from 37.0 in April, well above the economists' forecast of 37.6. The survey was conducted on May 15.

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Bulgaria suspended work on its portion of Russia's new South Stream natural gas pipeline, Prime Minister Plamen Oresharski said Sunday, after the EU raised concerns about the way contracts were awarded. "The project will continue after we remove points of contention raised by Brussels," he said in Sofia. South Stream is a 2,380-kilometre pipeline planned to transport Russian natural gas to Italy, with branches to Greece and Austria, via the Black Sea and across the Balkans, from 2015. The move pits the EU further against Russia, which is keen to proceed with the project because it would allow Russian gas to bypass Ukraine. Gas disputes have marred relations between Moscow and Kiev, including during the current crisis in Ukraine.

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Former army chief Abdel Fattah al-Sissi was sworn in Sunday as Egypt's president, vowing to end unrest after three years of instability. "Vanquishing terrorism and fulfilling security top my priorities," he said in an inaugural speech. "There will be no tolerance or appeasement towards anyone who resorts to violence and seeks to block the march towards the future." Egypt has been gripped by deadly violence since July, when the army toppled Islamist president Mohammed Morsi, Egypt's first democratically elected leader. The architect of Morsi's overthrow, al-Sissi pledged to achieve social justice and building an investment-friendly environment in Egypt.

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The election of Libyan Prime Minister Ahmed Mieeteg was unconstitutional, the country's Supreme Court ruled on Monday. Mieeteg was appointed by the Islamist-dominated parliament last month. However, the decision required 120 votes, a tally that was only achieved when extra members voted after Congress' deputy president had officially closed the session. That variation from legislative rules had led to calls from opposition members in the General National Congress that Mieeteg's appointment was improper. The court agreed, the al-Wasat website reported. Caretaker premier Abdullah al-Thinni has insisted that he remains the legitimate prime minister, even though Mieeteg's appointment was triggered by al-Thinni's decision to resign, after he said his family was attacked.

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At least 79 bodies were found in northern Afghanistan, which has been hit by torrential rains and flash floods, and many more people were still missing, an official said Sunday. More than a thousand homes in the district of Guzargah-e-Nur were swept away in the flooding that began late Friday, said Javid Basharat, the police spokesman for Baghlan province.

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The Nigerian military barred the distribution of major newspapers citing "grave security implications." Among the newspapers were The Daily Trust, The Nation, Leadership and Guardian, which were stopped from circulation on Friday and Saturday across the country. On Sunday morning in Kano, vendors were still to receive their copies. The military has said that sensitive material concerning security are being dispatched by some newspaper's vehicles across the country.

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Source: Alliance News


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