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Schroders plc (SDR.L)

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  • U.K. Firms Offer ‘Once-in-a-Generation’ Opportunity, Schroders Says
    Bloomberg

    U.K. Firms Offer ‘Once-in-a-Generation’ Opportunity, Schroders Says

    (Bloomberg) -- Schroders Plc is seeking to list a fund that would capture a “once-in-a-generation opportunity” to invest in U.K. companies, even as a number of initial public offerings with a similar pitch recently failed to drum up enough demand.Schroder British Opportunities Trust Plc plans to raise as much as 250 million pounds ($330 million) this month to take advantage of bargain valuations among U.K. companies, both public and private, which have been weighed down by prolonged Brexit-related uncertainty and the coronavirus crisis, more recently.“There’s an amazing amount of value in the U.K. market,” Rory Bateman, head of equities at Schroders and co-manager of the trust, said in an interview, noting that some of the companies being considered for investment trade more than 60% below their fair value. Citigroup Inc. strategists also advocated for cheaper British equities over their more expensive American counterparts in a note on Sunday.Cheapness alone hasn’t been enough to lure investors to U.K. equities, which remain some of the most underowned globally. The benchmark FTSE 100 Index, which has underperformed peers since the Brexit referendum, has fallen 15% this year, compared with a 6.3% drop in the Stoxx Europe 600 Index, while the mid-cap FTSE 250 Index has slumped 10%.The trust has a “great line-up” of mid-sized companies in its sights, ranging from health care and technology to industrials and financials, Bateman said. The potential targets have “hit a bit of a bump in the road because of the pandemic,” but are still growing even amid other risks such as the divorce with Europe, he added. “We can get into these businesses at very attractive valuations.”Brexit negotiations have entered another crucial week in an effort to overcome key barriers, if the U.K. and the European Union want to reach a trade deal before the transition period expires on Dec. 31.No Easy FeatListing a new fund in London is not for the faint-hearted, as it stands. At least 14 such deals, including Schroder British and several green investment trusts’ ongoing IPOs, have been announced in the City this year, though only three have managed to raise enough money to start trading as of yet, according to data compiled by Bloomberg.Among those that didn’t make it to the finish line is Sanford DeLand Asset Management Ltd.’s Buffettology Smaller Companies Investment Trust Plc, which planned to invest in 30 to 50 smaller London-listed companies. Tellworth British Recovery & Growth Trust Plc, which dubbed itself a “Best of British” fund, also withdrew its IPO after failing to meet its minimum size.“The IPO process for a closed-ended fund can be a tough one, particularly when similar strategies already exist,” says Markuz Jaffe, an investment fund analyst at N+1 Singer. “The newcomer will typically need to demonstrate sufficient diversification from, or superiority to, the incumbents,” Jaffe said by email.Still, Schroder British is confident it will succeed where others have struggled, thanks in part to its strategy of a 50:50 split between public and private equity. This is “something that is simply not seen, either across any investment trust or any other vehicle that’s out there,” according to Tim Creed, co-manager of the fund and head of U.K. and European private equity at Schroders.Such private stakes could provide a way around the broader trend of de-equitization that has gripped the U.K. Not only is London seeing fewer new companies enter the public market, the roster of already-listed stocks is shrinking fast due to a string of mergers and acquisitions.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • The City of London Is Late to a Bond Market Party
    Bloomberg

    The City of London Is Late to a Bond Market Party

    (Bloomberg Opinion) -- The U.K. government is finally adding green to the shades of gilts available to fixed-income investors. It’s unfashionably late to a party that’s been in full swing for several years. And its tardiness means a missed opportunity for the City of London to dominate an area of finance that will only increase in importance.Sales of green bonds — debt whose proceeds are used to finance environmentally friendly projects — have soared in recent years. Asset management firms are under increasing pressure from customers to demonstrate that their capital isn’t being allocated to activities that damage the planet, so there’s a ready source of demand. Pacific Investment Management Co., for example, launched a bond fund last month that it said was dedicated to finding “the likely winners of the transition to a net zero carbon economy.”Other nations have been quicker than the U.K. to take advantage of that growing appetite. France has led the pack, with a bond it first sold in January 2017 now the biggest in the market at more than 27 billion euros ($32 billion). In September, Germany’s debut green bond attracted 33 billion euros of bids for 6.5 billion euros of 10-year securities. The European Union has announced that green debt will comprise about 225 billion euros of the 750 billion euros it plans to raise for its pandemic recovery fund.JPMorgan Chase & Co. dominates the league table of green bond underwriters, managing about 6.5% of 2020’s worldwide sales. But French banks fill out the next two of the top three slots, with BNP Paribas SA and Credit Agricole SA coming in second and third, respectively, each with about 5.3% of this year’s deals. London-based banks Barclays Plc and HSBC Holdings Plc trail in fourth and fifth place, each with less than 4.5% of the new issues business.The City has been pleading with the U.K. to enter the green market. Some 32 firms with more than $13 trillion of assets, ranging from Schroders Plc to NatWest Group Plc, backed a “Green+ Gilt” proposal submitted to the Treasury last month. As Britain prepares to leave the EU, London needs to hang on to as much capital markets activity as possible. Moreover, with the U.K. chairing the Group of Seven industrialized nations in 2021, it’s an auspicious time to get its green act together.Issuing green debt might even save the government money as it widens the net of eligible investors particularly from ethical and ESG-related bond funds. But just as importantly it will pave the way for other U.K. borrowers to get with the program and tap into green finance too. For example, Daimler AG raised 1 billion euros by selling 10-year green bonds the day after Germany’s inaugural green government bund. It really does pay to set the right example.In order to attract the biggest following, it makes sense if the U.K. creates a green syndicated benchmark in the five- to 10-year part of the curve as this is where the bulk of corporate issuance is sold. That would maximize the benefits of creating a greener bond world in the City of London as part of its gambit to remain the center of European finance after Brexit.Britain, though, is still dragging its feet. The first green gilt sales won’t arrive until next year, Chancellor of the Exchequer Rishi Sunak said Monday. By then, Germany will already have five-, 10- and 30-year issues in circulation. Sunak’s plans to make it mandatory for companies to disclose their exposure to climate-change risks by 2025 will burnish the U.K.’s green credentials as it prepares to host a series of United Nations meetings on the climate emergency next year. But by delaying further, he’s missing the chance to make London the hub of green capital markets in Europe.So two cheers for the green gilts. They’re an idea whose time is long overdue. If only the government had acted sooner. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • What Type Of Returns Would Schroders'(LON:SDR) Shareholders Have Earned If They Purchased Their SharesThree Years Ago?
    Simply Wall St.

    What Type Of Returns Would Schroders'(LON:SDR) Shareholders Have Earned If They Purchased Their SharesThree Years Ago?

    You can invest in an index fund if you want to make sure your returns approximately match the overall market. In...