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ALEX BRUMMER: Natural disaster brewing in UK mining sector

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London has proven to be a magnet for tech-related floats in 2021. In the first half of the year, there were 49 listings on AIM and the main market, and they are still coming fast.

The latest to join the rush for an initial public offering (IPO) is Czech-based Eurowag, which provides transport payments and other services to smaller companies across the continent.

It chose to list in London because it is ‘top’, and has got city great Paul Manduca on the phone as chairman.

Mining giant BHP’s exit from FTSE 100 means some UK funds won’t be able to hold dividend stocks at a time of global metal surge

Eurowag’s decision to float, worth an estimated £1.7 billion, comes on the heels of the announcement of the life sciences group Oxford Nanapore.

In the wings waiting for launch, several other fintech players, including Klarna, Revolut, Monzo and Atom Bank, are all with their eyes on the city.

Fortune Magazine describes London as ‘the 2021 hub for hot new tech IPOs’. As welcome as this renaissance is, and great as its potential, it will do little to improve the UK’s reputation if major battalion shareholders sit on their hands as behemoths flee these shores.

Mining giant BHP’s departure from the FTSE 100 – where it competes with Astrazeneca for the best slot – to a new home in Sydney is a mockery.

It means some UK funds will not be able to hold dividend stocks at a time of a global metal surge.

Furthermore, hiding in Oz, far out of step with the New York and London time zones, is bad for liquidity and ESG transparency.

What makes BHP’s departure particularly embarrassing is that it is effectively a capitulation to activist Elliott Partners’ agitation.

Former investment chief of Aviva, David Cumming, in an interview in the Sunday Telegraph, expressed his surprise that there has been no resistance to BHP ‘going to Australia’ and warning against Rio Tinto, whose history in the UK dates back to 1873, and the the same.

Legal & General, which owns just under 1.9 percent of BHP, has publicly expressed disappointment at the shift.

The danger to the London Stock Exchange is that its reputation as a champion of natural resources will be undermined. Home to Anglo-American, Glencore, Vendanta Resources and many others, the LSE’s weight in the industry is significant and includes far-flung operations including Chile and Mongolia.

There is intense speculation that, following the destruction of the sacred Juukan Gorge and encountering indigenous peoples in Australia, Rio Tinto may be tempted to move Down Under to relieve political pressure.

Chief executive Jakob Stausholm, who managed to get the job done after the explosion, backs keeping the quote in London. An Aussie successor to chairman Simon Thompson might see things differently.

The lack of a campaign to keep BHP in London is surprising. In the recent past, Unilever, Smith & Nephew and plumbing group Ferguson have all looked at moving their main quote to other markets. They are cut off at the pass.

BHP should never have deserted. Any attempt to transfer Rio to Oz would be a bitter blow and a betrayal of its heritage that must be vigorously resisted.

click bait

Primark owner ABF has long maintained that online home delivery doesn’t make much sense because of the cheap fashion on offer.

Despite the pandemic’s stop-go trading in 2021, it has continued to expand storefront, opening 15 stores, including four in the US, with Philadelphia being the latest addition.

Full-year earnings estimates have been raised, but a combination of delivery issues and Covid means same store sales plummeted in the fourth quarter, leading to a sell-off of the stock.

As always, with sugar among the stars, AB’s food companies are there to better balance the results.

Intriguingly, Primark is upgrading its digital presence and recruiting new talent. A stronger and better online sales presence indicates a click-and-collect option that has been going on for too long.

Private grief

As if it didn’t already have enough resources, private equity firm CVC, which is currently stalking Spain’s La Liga, has increased its firepower by getting its hands on Glendower, a spin-off of Deutsche Bank.

Together, the enlarged outfit will have a net worth of £96 billion. In typical private equity style, none of the financial details of the transaction are disclosed. That’s a lot of new sources in secret hands.

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