Connect with us

Business

What is behind the soaring interest in Signature Aviation? | Business News

Published

on

A deserted North Terminal at Gatwick Airport

For much of last year, it felt as if a rash of takeover bids for UK companies was looming, due to both the weakness in the pound and the UK stock market’s depressed valuation relative to its peers.

Sure enough, towards the end of 2020, that came to pass, with overseas buyers emerging for companies as diverse as the gaming firm William Hill, the insurer RSA, and the retirement homebuilder McCarthy & Stone.

Already, 2021 has continued in a similar vein with an £8.1bn takeover approach from US casino giant MGM for Entain, the owner of Ladbrokes and Coral.

And on Monday, a takeover battle that got under way just before Christmas appeared to be concluded when Signature Aviation, the aviation services group, agreed to a £3.43bn takeover bid from Global Infrastructure Partners (GIP), the New York-based investment fund best known in this country for buying Gatwick Airport in 2009.

GIP has outbid a rival consortium led by Blackstone, the private equity giant, which had joined forces with Cascade, the investment firm that manages Microsoft founder Bill Gates’s fortune, which is currently Signature’s biggest shareholder with a 17% stake. Sky’s City editor, Mark Kleinman, revealed last week that another private equity firm, Carlyle Group, was also considering making an offer.

The offer has been recommended to shareholders by the Signature board, chaired by the veteran industrialist Sir Nigel Rudd, but this may not be the end of the matter.

Shares of Signature, which are valued at 405p under the takeover, were trading as high as 445p at one point today – indicating that investors think a counter-bid is coming.

Sir Nigel has presided over the previous takeover of three leading British companies – Boots, the engineer Invensys and the glass-maker Pilkington – and is a past master at getting a competitive auction going.

Image:
Global Infrastructure Partners is best known in the UK for buying Gatwick Airport in 2009

He said today: “We believe that the offer from GIP represents an attractive and certain value in cash today for Signature shareholders, reflecting the high quality of the business and its network, its people and its future prospects.

“The Signature directors believe that the proposal provides clear benefits to Signature shareholders and GIP’s operational and financial resources will generate enhanced opportunities for our employees, and ensure continued high-quality, full-service flight support for business and general aviation travel.”

A key question investors will be asking, though, is what both Blackstone and GIP have spotted in Signature’s prospects to be prepared to offer such sums. Blackstone’s opening salvo, just before Christmas, was pitched at 381p-a-share and, at the time, that represented a 40% premium to Signature’s share price before news of its interest became public, not to mention being around a fifth more than the shares were in January last year, before COVID-19 hammered the global aviation sector.

But COVID-19 may also help explain the interest. Signature is the world’s leading provider of ground handling, passenger and pilot amenities, technical support, hangar rental and fuelling at 370 locations around the world, including Heathrow, Luton Airport and Biggin Hill in the UK.

In particular, it has built a strong reputation providing refuelling and maintenance services to operators of private jets, a sector that has flourished during the lockdowns. Its biggest single customer is NetJets, the private jet operator owned by Berkshire Hathaway, the vehicle of investment billionaire Warren Buffett.

That expertise means Signature is well known by a number of wealthy individuals and to those working in the top echelons of private equity, especially in the United States, from where it derives 90% of its revenues.

Mr Gates, who has described private jets as his one guilty pleasure in life, first bought shares in the business in 2009 and topped up his investment twice last year as the share price fell on COVID concerns.

While Signature is now a services company, older stock market hands will remember it more as a stalwart of manufacturing, when it traded under the name BBA.

Bill Gates, Co-Chair of Bill & Melinda Gates Foundation, attends a conversation at the 2019 New Economy Forum in Beijing, China November 21, 2019
Image:
Bill Gates has described private jets as his one guilty pleasure in life

The company traces its origins back to 1879 when William Fenton, a Scottish-born cotton mill manager working in Sweden, invented a new form of power transmission belting.

He joined forces with a London merchant, Walter Wilson-Cobbett, to open a site in Dundee under the name William Fenton & Co.

It later changed its name to W Wilson-Cobbett and, later still, to Scandinavia Belting. In 1925, after buying British Asbestos, the name was changed again to British Belting and Asbestos.

Among customers in its early years were Ford, to whom it supplied transmission linings for the Model T, while other car-makers it supplied in the early years of the 20th century included Morris, Austin and Vauxhall in the UK and Renault and Bugatti in France.

It also supplied parts for fighter aircraft including the Spitfire, the Hurricane and the Typhoon. Throughout this entire period, it retained a link to its founders, with Charles Fenton – great-grandson of William Fenton – only stepping down as a director of the company in 1991.

During the decade prior to that, it had become the world’s biggest supplier of brake pads to the motor industry, but, by the time Mr Fenton left the company, it was beginning to move into aviation services.

In April 1986 it had acquired a business called Guthrie Corporation, whose assets included Page Avjet, an executive aircraft interiors business. This was merged in 1992 with Butler, a provider of fixed base and airline service operations, with the combined operation later being rechristened Signature Flight Support.

In 2006, when Sir Nigel was interim chief executive, BBA was demerged into BBA Aviation and a materials business called Fiberweb. The latter company was taken over in 2013 for £182.5m by the US company Polymer Group.

Other acquisitions and disposals have followed during the last decade, one of which, a provider of specialist business and general aviation support services called Landmark Aviation, was ironically bought from Carlyle for more than $2bn in 2016, giving the company the largest network of fuelling stops in the US. The entire business was renamed Signature Aviation in 2019.

Now it too appears to be going the same way as Fiberweb – but who ends up as ultimate owner of this business still looks open to debate.

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Virgin Wines toasts AIM of £100m London stock market listing | Business News

Published

on

The company . Pic: Virgin Wines

One of the UK’s biggest direct-to-consumer wine retailers is preparing to float on the London stock market after seeing a coronavirus-fuelled surge in sales.

Sky News has learnt that Virgin Wines, which has approximately 150,000 customer subscribers, is working with advisers on an AIM listing that could take place as early as the first quarter of this year.

City sources said on Thursday that the flotation could value Virgin Wines at somewhere in the region of £100m.

Liberum, the investment bank, is working on the deal.

Image:
Sir Richard Branson’s Virgin Group is no longer a shareholder in the company. Pic: Virgin Wines

The plan to take the 21 year-old company public exemplifies the boom experienced by many home delivery businesses during the COVID-19 crisis.

Surging sales to locked-down British consumers are spurring companies such as Deliveroo and Moonpig, the online greeting cards retailer, to go public, while the online florist Bloom & Wild has just raised funds at a stellar valuation.

Virgin Wines’ prospective float represents a change of tack for the company, which has also been working with other advisers from Lincoln International on a review of strategic options.

It is now focused on an IPO rather than a private sale, according to insiders.

The company licenses the Virgin brand from Sir Richard Branson’s Virgin empire, and last changed hands seven years ago when Mobeus Equity Partners and Connection Capital provided debt and equity funding for a £16m management buyout.

It was previously owned by Direct Wines, having been established in 2000.

Virgin Wines’ products are available to customers through both online pay-as-you-go and subscription models.

The business has expanded in recent years through the launch of craft beers and spirit collections, corporate and consumer gifting items.

More than 90% of the wines sold by Virgin Wines by volume are exclusive to the company, with more than 700 wines on offer.

Unlike many other Virgin-branded companies, Sir Richard’s group is not a shareholder in the wine business.

In its most recent annual accounts, for the year to June 28, 2019, Virgin Wines reported a pre-tax profit of £1.7m.

It said it had increased stockholding levels in case of delays to imports triggered by a possible no-deal Brexit.

According to one source close to the company, Virgin Wines delivered more than 1m cases of wine to its customers in 2020.

The current management team, led by Jay Wright, chief executive, and finance chief Graham Weir, are expected to steer it through an AIM float.

Virgin Wines and Liberum both declined to comment.

Continue Reading

Business

Reddit forum’s role in Gamestop shares frenzy faces regulatory probe | Business News

Published

on

Janet Yellen, U.S. President-elect Joe Biden's nominee to be treasury secretary, speaks as Biden announces nominees and appointees to serve on his economic policy team at his transition headquarters in Wilmington, Delaware

US financial market regulators are to review the extraordinary rallies in the shares of struggling gaming retailer Gamestop, part-driven by participants of an investor forum on Reddit.

The Securities and Exchange Commission said it was working with fellow regulators to “assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants”.

The action reflects deep and widespread concern over the functioning of financial markets.

Gamestop shares were up by 1,744% in the year to date – with a market value above $20bn – at the close of trading on Wednesday night.

Image:
The share frenzy has attracted White House scrutiny as treasury secretary Janet Yellen monitors developments

The value boom of the past week has created more than $2bn in personal wealth for its three largest individual shareholders, whose holdings have not increased during the frenzy.

The staggering leap represents a victory for retail investors over hedge fund short-sellers, who are nursing heavy losses, as markets witness a boom in amateur stock trading.

Millions of Americans have taken advantage of zero-commission trading platforms during the coronavirus crisis – often using social media forums to discuss opportunities.

The value surge has not been restricted to Gamestop.

Its shares, and those of other firms including BlackBerry and AMC Entertainment, fell by more than 20% in extended trading when it emerged that Reddit had temporarily closed the Wallstreetbets chat room.

The volatility prompted widespread calls for scrutiny of trading fuelled by anonymous social media posts. Reddit said it had not been contacted by any authorities in relation to users’ behaviour.

A woman wears a mask as she walks past a GameStop store in Des Plaines, Ill., Thursday, Oct. 15, 2020. GameStop is closing more stores than it originally planned, with the struggling retailer warning of more closures next year. (AP Photo/Nam Y. Huh)
Image:
The company’s own announcements have been seen to have played no role in the meteoric rise in its stock

Wider market falls in recent days have been blamed on hedge funds selling positions to pay for losses shorting Gamestop.

Wednesday’s session saw the main indexes on Wall St lose more than 2% and futures indicate further turbulence ahead.

Even the new US treasury secretary, Janet Yellen, said she was “monitoring the situation” while a state regulator has called for Gamestop shares to be suspended for 30 days to allow a cooling off period.

Technology investor Chamath Palihapitiya told Sky’s sister channel CNBC: “We are moving to a world where ordinary folk have the same access as professionals and can come to the same conclusion or maybe the opposite.

“The solution is more transparency on the institutional side, not less access for retail.”

In Gamestop’s case, it has been shuttering stores for years in a tough retail landscape and market analysts have likened the stock interest – driven purely by retail investors – to a pyramid scheme.

Nasdaq chief Adena Friedman said: “If we see a significant rise in the chatter on social media … and we also match that up against unusual trading activity, we will potentially halt that stock to allow ourselves to investigate the situation.”

Continue Reading

Business

EasyJet warns of lockdown drag but sees pent-up demand on horizon

Published

on

EasyJet warns of lockdown drag but sees pent-up demand on horizon

EasyJet has warned it expects to fly just 10% of normal services in its current financial quarter as coronavirus crisis restrictions continue to take a toll on travel.

Continue Reading

Trending