Rival preparing to better Fortress bid for Morrisons

Liam Roche
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Rival preparing to better Fortress bid for Morrisons

Sources say that 280p will be the appropriate level for an offer by Clayton Dubilier & Rice

Clayton Dubilier & Rice, the American private equity firm, is preparing to bid for Morrisons this week as the company will look to usurp Fortress.

Having made a bid earlier in the process, Clayton Dubilier & Rice will now need to raise its offer by at least 20% to beat its rival.

Less than two weeks ago, Fortress improved its offer by £400m, raising its bid to 272p, as leading Morrisons shareholders hinted that their previous offer was too low.

The Times reported that Clayton Dubilier & Rice will need to offer at least 275p, while some with better knowledge of the deal have suggested that 280p would be a more appropriate offer.

The board delayed their vote on Fortress’s offer in order to allow Clayton Dubilier & Rice to put forward their proposal.

Morrisons consists of just under 500 stores and over 110,000 employees across the UK.

Morrisons first existed as a market stall in Bradford in 1899 owned by William Morrison. His son then took over the company and opened the first supermarket in the 1960s.

The Morrisons share price is uppitiest by 0.21% during the morning session on Monday.

Oil prices down on negative economic data from China

Liam Roche
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Oil prices down on negative economic data from China

Oil prices fall by over 1% on Monday morning

Oil prices were down by over 1% during the morning session on Monday as negative economic data emerged from China highlighting the impact of the coronavirus pandemic on the economy.

Brent crude was down 1.21% at $69.40 a barrel by 0857 GMT, while West Texas Intermediate fell by 1.28% to $67.16 per barrel.

Growth in retail sales and factory output slowed well down in July in China, failing to meet expectations as new outbreaks of Covid-19 interrupted business.

“Oil futures weakness … is likely triggered by weaker-than-expected growth data from China, which is a major consumer of oil,” said Kelvin Wong, market analyst at CMC Markets in Singapore. “All in all, the global peak growth narrative has been intensified.”

The International Energy Agency said last week that raised demand for crude oil switched back in July and it now expects demand for the commodity to rise at a slower rate for the remainder of 2021. This is down to the prevalence of the Delta variant of the coronavirus.

The news raises question marks over the near-term outlook for oil after Joe Biden called on OPEC and its allies to raise its levels of output in a bid to keep rising fuel prices under control, as inflation in America reaches its highest yearly growth rate in 13 years.

Some analysts remain bullish on the commodity despite some recent bad news.

Bank of America commodities strategist Francisco Blanch is making the case of $100 per barrel oil in 2022 as supply will begin to fall.

“First, there is plenty of pent up mobility demand after an 18 month lockdown. Second, mass transit will lag, boosting private car usage for a prolonged period of time. Third, pre-pandemic studies show more remote work could result in more miles driven, as work-from-home turns into work-from-car. On the supply side, we expect government policy pressure in the U.S. and around the world to curb capex over coming quarters to meet Paris goals. Secondly, investors have become more vocal against energy sector spending for both financial and ESG reasons. Third, judicial pressures are rising to limit carbon dioxide emissions. In short, demand is poised to bounce back and supply may not fully keep up, placing OPEC in control of the oil market in 2022,” said Blanch.

£40m Nearer to the LIGHT

Jon Levinson
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£40m Nearer to the LIGHT

Advanced Oncotherapy (LON: AVO), recently announcedits largest single fund raise as this incredible six-year journey nears the end of the product development stage. AVO was a shell with a technology development agreement from Cern in Geneva. (Makers of the largest and fastest particle accelerator, the hydron collider). AVO’s seized its opportunity to collaborate with Cern’s 10,000 scientists to develop a new system to deliver proton beam therapy, which is a prohibitively expensive, but established effective cancer treatment.
AVO’s new ‘Linear’, LIGHT (Linac for Image Guided Hadron Thera...

Tip: Right on track

Andrew Hore
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Tip: Right on track

Software companies do not always succeed in commercialising their technology however good it might be. A decision is then required on whether to continue or change direction. One AIM company that made the decision to take a new direction has been winning new contracts in international markets.
The company’s original banking technology initially won customers, but it did not progress as management wanted. The AIM quotation had a value, but it would not be fully utilised with the business as it was
The directors decided to find another technology business that might benefit from the expertise of...

New Aquis admission: Yooma Wellness talks up acquisition pipeline

Andrew Hore
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New Aquis admission: Yooma Wellness talks up acquisition pipeline

Yooma Wellness Inc has a dual quotation on the Canadian Securities Exchange and obtaining the Aquis quotation is part of the stated strategy to become the largest CBD business in the world. Acquisitions have been made this year and at least three more are lined up.
There are more potential targets and the cash raised in the placing is not going to fund all the acquisitions if they come to fruition. More cash is likely to be raised because of the ambitious plans of the management.
The placing price was a 14% discount to the Canadian Securities Exchange. There are no trades reported on Aquis for...

Fintech company sees record numbers of female investors

Liam Roche
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Fintech company sees record numbers of female investors

Chip finds that women outpace men when it comes to ESG investing

Chip, the digital savings app, has analysed the demographics and behaviors of its 350,000 users to find a record number of female investors.

In addition, it found that there is a higher appetite for risk among women compared to typical data but also a strong uptake in Environmental, Social, and Governance (or ESG) investing.

The fintech, which last month launched its ChipX plan, bringing more new BlackRock funds to its users, found that close to a third – or 27% – of its investors are women.

The figure is 17% higher than the national average reported by the Office for National Statistics.

Chip also found that 46% of its female investors have a Stocks & Shares ISA – nearly four times more than the UK average of 12%, as reported by Boring Money.

The analysis of specific funds women choose to invest in found that the top five funds most popular among female investors are:

1Balanced (official name BlackRock Consensus 60 – Acc (D)
2Ethical X (official name MyMap 5 Select ESG Fund)
3Cautious X (official name MyMap 4)
4Clean Energy (official name iShares Global Clean Energy UCITS ETF)
5Emerging Markets (official name BlackRock Emerging Markets Fund)

Chip’s findings suggest that the notion that women adopt a more conservative and cautious approach while men tend to have more appetite for risk, including investing in new and untested shares, is becoming increasingly outdated.

Simon Rabin, CEO of Chip, commented: “Our goal is to democratise savings and investments. I believe that everyone should have access to tools that can effortlessly take their savings to the next level and help grow their wealth. This includes levelling out the playing field, which has traditionally skewed male.”

“We want to show that investing is no longer an elite, exclusive world dominated by dusty legacy wealth managers or macho crypto-trading “bros”. Investing is a tool everyone should consider using. I hope that by removing barriers in the form of mountains of paperwork, overly complicated interfaces and complex language, we can empower absolutely everyone to put their money to work.”

Aviva share price: the hard work starts now for CEO Amanda Blanc

Liam Roche
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Aviva share price: the hard work starts now for CEO Amanda Blanc

Aviva Share Price

The Aviva share price (LON:AV) is up by over 5% over the past two days as the company made some big announcements yesterday. Thursday’s results round off what has been a positive year so far for the FTSE 100 company, which now has an optimistic outlook, following strong measures taken by CEO Amanda Blanc. Year-to-date the Aviva share price is up by 31.15%, and is well above its pre-pandemic level, sitting at 428.70p at the time of writing. Praise has duly been arriving for Amanda Blanc, however, the boss is clear that these results are only the beginning.

Disposals

Blanc has impressed so far by very rapidly jettisoning Aviva’s non-core operations. Aviva has carried out a series of disposals over the past year, allowing the company to focus its efforts on the key UK, Ireland and Canada markets. The disposals, not all of which are yet complete, will bring in a total of £7.5bn. The money not returned to shareholders will be used to pay down debt.

“However, this was low hanging fruit and now this process is pretty much complete – and the cash returns to shareholders have been more or less confirmed – attention is likely to switch to the performance of the remaining core business,” says AJ Bell financial analyst Danni Hewson.

Cevian

Aviva’s operating profit rose by 17% to £725m over the first half of the year. However, it came in below the company-provided consensus of £781m. “The reason behind the weaker than forecast showing is weakness in the bulk annuity market – where pension schemes buy an insurance policy to cover future pensions and benefits due to be paid to its members,” said Hewson.

“It helps when this bitter pill on profit is sweetened by a very chunky return of capital, though still short of what activist investor Cevian had been pushing for since it joined the register of shareholders in June,” Hewson added.

Cevian being around means there is a lower chance of Blanc getting complacent and they are likely to keep her feet to the fire as they look for progress on driving down costs to support the Aviva share price.

“Looking ahead, Aviva needs to demonstrate it’s got a functioning plan for turning its huge cash inflows into ongoing returns for shareholders – as well as navigating changing risks as climate change sees protection claims rise – to continue the impressive share price growth seen in the past 12 months,” James Andrews, senior personal finance expert at money.co.uk, said.

Olam opts for London for IPO

Liam Roche
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Olam opts for London for IPO

Olam has the potential to break into the FTSE 100 by listing its food ingredients unit

Olam International is weighing up the possibility of a London listing of its food ingredients unit for next year which would allow the company to raise £2bn.

The company confirmed on Friday that Olam Food Ingredients was looking at a premium listing on the London Stock Exchange, in addition to a secondary listing in Singapore during the first half of next year.

“It will be a substantial IPO. It will be amongst the larger IPOs done on the London Stock Exchange (LSE) in the recent past,” co-founder and CEO Sunny Verghese told Reuters in an interview. However, he did not reveal a fundraising target at this stage.

“One of the reasons that we are doing this exercise of re-organising is to make sure that we can focus and simplify a fairly diverse complex portfolio,” Verghese added.

The decision is welcome news for the UK market, which has been seen to be struggling to attract the biggest companies.

Olam Food Ingredients has the potential to break into the FTSE 100 based on the valuations of rival food ingredients firms.

Commenting on Olam picking London for its premium IPO, Mark Lynch, Partner at corporate finance house, Oghma Partners, said: “The listing of Olam ingredients in the UK is a vote of confidence in the London Equity market and reflects, amongst other things, its deep pool of liquidity.”

“Assuming that the Company does qualify as a UK Food Manufacturer, it provides a significant boost to the sector that has lost many former FTSE companies over the last twenty years including, Cadbury Schweppes, United Biscuits, Hillsdown Holdings, Albert Fisher, Northern Foods and Unigate. Importantly it also offers investors a route into the changing world of food ingredients which is seeing an expansion in its opportunities through the growth in demand for plant based foods, plus expanding Ag Tech and Food Tech applications and the focus of consumers and clients on traceability and sustainability.”

Institutional investors are anticipating an imminent commodity supercycle

Liam Roche
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Institutional investors are anticipating an imminent commodity supercycle

Retail investors have not yet caught on to the hype around commodities

Institutional investors are increasingly making the case that a commodity supercycle is on the horizon, particularly where copper is concerned.

Research has revealed that 82% of German pension funds believe that demand for commodities is set to surpass supply for an extended period of time.

A particular beneficiary of this demand is copper, according to analysts at Goldman Sachs.

At the time of writing, the copper price currently stands at $9,435.60. However, Goldman Sachs suggests that the price of the red metal could get to $11,500 within the next 12 months.

The major US bank is also expecting copper to outperform gold next year, as the yellow metal continues to underperform in 2021.

Analysis by Block-Builders.net of Google search engine data suggests that most people have not caught on to the red metal’s potential as an investment.

A score of 100 on Google trend means the highest possible demand, however, relative search volume for “buy copper” stands at 24.

Therefore, the view that copper is set to enjoy a supercycle, is one of institutional investors only.

Copper continues to be useful in a variety of sectors, particularly housing, electronics and cars. The red metal is set to play an important role in the renewable energy sector too, with electric vehicles and sources of renewable energy both using copper.

Chile accounts for meeting 28% of global demand for copper. It is a country that faces political events which can significantly impact the price of copper. For example, recent strikes led to the closure of mines and price increases.

“A variety of developments are fuelling demand for copper,” according to Block-Builders analyst Raphael Lulay. “This is also making the metal more and more attractive to investors.”

Early in the year, UK Investor Magazine reported on three commodities funds which could stand to gain from a supercycle. There is a mix of passive and actively managed funds along with selections providing attractive yields.

Disney surpasses expectations on new subscribers and reopening of theme parks

Liam Roche
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0
Disney surpasses expectations on new subscribers and reopening of theme parks

The pandemic allowed Disney to thrive in a fiercely competitive market

Disney (NYSE:DIS) saw its revenue beat expectations in Q3 as the company acquired new streaming subscribers, in addition to opening up its theme parks to thrill seekers again.

Revenue rose by 45% to $17.02bn (£12.3bn) for the quarter ending in July, surpassing estimates by analysts of $16.76bn (£12.14bn).

Having made a loss of $4.72bn (£3.4bn) in Q3 last year, Disney’s net income was $918m (£664m).

The pandemic allowed Disney to thrive and it is now one of the top dogs in what is a fiercely competitive market.

Between its three offerings – Disney+, Hulu and ESPN – the company brought in 15m new subscribers, bringing the total to just under 174m.

Over the same period, Netflix added 1.5m subscribers, as the streaming company looks vulnerable to new competition coming into the market.

The Disney share price rose by 5.3% in after-hours trading with Bob Chapek, Disney chief executive, praising the company’s position amid the challenges of the pandemic.

Additionally, Disney’s theme parks were a cause for optimism, with sites in America, China and France opening back up, and allowing the business to return to a profit. During the quarter, Disney’s parks and consumer products business made $356m in operating income on $4.3bn in revenue.

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