Square Mile under siege from foreign predators as activist investment falls out of fashion: ALEX BRUMMER
Labour’s profound ignorance of business already has been costly for jobs, inflation and investment.
Failure to think through the consequences of policies, such as the National Insurance hike, has wrecked the manifesto growth and change agendas.
Now there must be concern that Government neglect of developments in the City of London could sow the destruction of Britain’s highest tax-generating sector.
HMRC data shows that the Square Mile and the professional services it generates were worth £110.2billion, or 12.3 per cent of the UK’s tax income in 2024-25.
Yet, each time a financial firm is sold, there is danger that some of that income and expertise will flow overseas, depriving the country of revenues to fund public services and its skill base.
There are clear and present dangers to income generated by financial firms and control over the UK’s savings, investment and equity culture.
Powerhouse: HMRC data shows that the Square Mile and the professional services it generates was worth £110.2bn, or 12.3%, of the UK’s tax income in 2024-25
The decision of Schroders to capitulate, without a fight, to a £9.9billion takeover by Chicago asset manager Nuveen after two centuries in Britain is deeply disturbing.
It is understandable that a younger generation of Schroder descendants, who own 44 per cent of the blue-blooded firm, might want to diversify their wealth.
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But the potential damage to the City, the London Stock Exchange and Britain’s equity culture is profound.
Moreover, the wrecking ball is swinging as another pillar of the Square Mile, the London Stock Exchange Group (more of which later), is under siege from corporate vandals Elliott Management.
Yet no one in the Treasury or the Commons, on the business or banking committees, is showing interest in the destruction. In the past one might have looked to the Bank of England for leadership on a threat to City hegemony.
So far there has been deafening silence. The current raids on asset management in Britain are a reminder of the way in which investment banks succumbed to overseas takeovers in the 1990s.
Great names, trading and advisory skills have long been buried. Warburg scarcely features at Swiss bank UBS; Schroders’ merchant bank vanished inside Citigroup; Cazenove barely receives mention at JP Morgan; asset manager Mercury, once an arm of Warburg, is buried in Blackstone.
The asset management and the savings industry are being denuded before our eyes by takeovers.
Henderson, at first subsumed by Janus in 2017, was bought out last year by activist investor Trian, vehicle of Brooklyn Beckham’s father-in-law Nelson Peltz.
Hargreaves Lansdown is off the stock market and owned by private equity CVC and Nordic. Evelyn Partners has just been bought for £2.7billion by NatWest.
That restores it to UK ownership, but weakens the independence and wisdom valued by clients such as this writer.
Activist investment is out of fashion. Chancellor Rachel Reeves, among others, wants fund managers to invest in Britain, its great companies, start-ups and infrastructure.
It isn’t going to happen if index-driven passive management drives ever more funds towards Wall Street, Silicon Valley and AI.
Stock-taking
The London Stock Exchange Group has a brilliant record of seeing off overseas predators and adapting to change.
The purchase of Russell a decade ago gave it muscle in global index trading. The far bigger reverse takeover of Refinitiv provided data strength, and through Tradeweb it has a foothold in electronic trading of fixed interest.
Elliott wants it to divest Tradeweb and raise cash for a £5billion share buyback.
That might be good for Elliott seeking a quick profit. But it would be a blow to the longer-term trading leadership of the City and Britain.
Meltdown
Summers are getting warmer but that has done nothing to bolster the value of ice cream to big consumer brand groups.
Unilever has spun off its Magnum ice cream arm into a separate Dutch company.
Now, struggling Swiss giant Nestlé is selling its ice cream arm to joint venture Häagen-Dazs partner Froneri.
Whatever happened to ‘I scream, you scream, we all scream for ice cream!’?
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