S166 millionaires were created Wednesday in the City. Well, strictly speaking, the fortunes of the investment professionals at private equity firm Bridgepoint were not “created” all at once. On the contrary, listing the company on the stock exchange crystallized the value of the shares they already owned and allowed them to sell a few.
But, however you think of the numbers from this £ 2.88bn IPO, they illustrate how private equity is challenging investment banking for highest paid gig status in the financial game. .
With 27 billion euros (£ 23 billion) under management, Bridgepoint is big, but not like KKR, CVC or Blackstone. Still, the combined 78% stake before the happy 166 IPO was worth £ 2bn on listing, or £ 12m per head on average.
The loot is obviously not evenly divided between the Bridgepoint brothers. It can be seen from the prospectus that Executive Chairman William Jackson sold shares worth nearly £ 8million in the IPO and ended up with a stake worth £ 33million, or £ 42million after shares rose a quarter on the first day of trading.
Frédéric Pescatori, head of operations in France and Southern Europe, is even prettier: he still has shares worth £ 85m after selling a bundle for £ 16m. Even at the bottom of the ladder, however, the juniors among the 166 are still probably considering a million or two.
Still, one could consider Bridgepoint to have been very successful and its market value the result of decades of effort since a management buyout by NatWest.
The same cannot be said, however, of the very unusual – and very significant – signing fees, billed as “up-front fees”, that Bridgepoint paid to its new non-executive directors.
Archie Norman, the senior independent director, received £ 1.75million, or £ 962,000 after tax, on top of his more standard fee of £ 200,000 for filling the part-time role. Three other non-executives, including ITV chief executive Carolyn McCall, were awarded £ 500,000 just for climbing on board.
They must have used the money to buy shares in Bridgepoint, and, yes, they are all hired individuals in British corporate life. But, come on, the initial signing bonuses of this size for non-executives push the boundaries of their independent director status.
These are the people who are supposed to deliver the scrutiny through the eyes of a stranger. Maybe the arrangement looks normal from inside the Millionaire Factory, but in terms of commonly understood governance, it really isn’t.
Inclusion pays off
“The Bank of England recognizes that in order to continue its mission, it must reflect the diversity of the people it serves. It has not always been the case. “
No, it wasn’t Andrew Bailey, the BOE governor, who pledged on Wednesday that Threadneedle Street would do more to tackle systemic racial inequalities. It was his predecessor, Mark Carney, in a speech in February 2017. Indeed, Carney, at the same address, said the central bank had three years ago “made diversity and talent a central pillar” of the first strategic plan.
You see the picture: the latest critical report from the Bank’s governing body, which found “material disparities between lived collective experiences, career opportunities and the results of ethnic and white minority colleagues”, comes after years of promises of personal improvement from the bank’s management. .
One of the suggestions in the report is to empower senior managers through their salaries, to achieve inclusion goals. It’s a better idea than another round of Carney-style speeches.
Another earnings statement, yet another improved profit forecast for Next, the high street retailer that makes it easy. It’s now been six upgrades since the big downgrade at the start of the lockdown in March 2020.
Lots of skills, tight cost control, and strategic planning lie behind the outperformance, but what’s amazing is that the city is taken by surprise every time. Shares rose 7.5%.
At least three of the four factors cited by chief executive Simon Wolfson to explain the “surprisingly strong sales performance” in recent weeks could be detected by looking out the window or following the news. It was hot in late May and early June; fewer vacations abroad boosted domestic spending; and consumer savings have increased.
Wolfson expects things to slow down in the second half of Next’s fiscal year as some of those factors dissipate. It will be in the right direction – but don’t be shocked if things improve again.