Newspaper article The Evening Standard (London, England)

Wimbledon Effect Is a Loser for Britain PLC

Newspaper article The Evening Standard (London, England)

Wimbledon Effect Is a Loser for Britain PLC

Article excerpt


WE should hoist a "For Sale" over Britain and wait for offers.

Everything is up for grabs. Ever since Big Bang 20 years ago, a new City has grown up in our midst - one in which traditional loyalties, methods and relationships count for little and the deal is everything.

The arrival of the Wall Street "bulge bracket" banks with their bonus culture has changed the landscape. Of course, there were mergers and acquisitions before the City had its shake-up but it wasn't like this.

The idea of a company developing long-term, organically, now has a distinctly old-fashioned feel to it.

Everyone is looking for a killing. When a desperate BAA, the airports operator under siege from Spanish group Ferrovial, turned to Goldman Sachs for assistance, the boys from the US bank responded. To the fury of then-BAA chairman Marcus Agius, they suggested that they, rather than Ferrovial, took over the owner of Heathrow. They were shown the door but Agius, a gentleman banker of the old school, couldn't believe what he'd heard.

Along with the bankers have come a new type of shareholder. The hedge funds are also out for a quick turn. In the current jargon of the City, "shareholder activism" - shorthand for giving the board a good kicking and often involving the shadowy hand of a hedge fund, is the order of the day.

The short-term in-and-out merchants of the hedge funds have also been joined by the private equity group.

Backed by huge amounts of cash, mostly from the US and often US-based, they are looking to take companies off the stock market, make their assets squeal and, usually after three years, sell them on again - either by flogging them to management or to another private equity group or putting them back on the public list.

What this has meant is a sea change in attitude - and not just in the City.

Britain has gone from being a small island state to world capital destination.

The UK received more foreign direct investment last year than any other country. …

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