China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

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Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

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China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

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Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

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Archive | November, 2016

Soros and Paulson bet on Spain property

Posted on 28 February 2014 by

Construction workers are seen on scaffolding at a building site in Madrid, Spain,©Bloomberg

George Soros and John Paulson are taking major stakes in the flotation of a Spanish property group, reflecting an increasing confidence among investors in the eurozone periphery’s economic recovery.

The two hedge fund managers – who were ranked first and fourth in the world for their total earnings in 2013 – have both taken €92m stakes in Hispania Activos Inmobiliarios, said people with knowledge of the deal.

Spanish recovery

Spanish recoveryProperty investment, house price index and GDP

    Last week, Hispania announced plans for an initial public offering of remaining shares – having already raised a substantial part of its €500m target from early-stage investors. Its prospectus is awaiting approval from Spain’s regulators.

    Hispania is seeking to list on the Madrid Stock Exchange as a real estate investment trust, focusing on property with scope for value growth, primarily in key cities. It is targeting a double-digit annual total return over a six-year period, people familiar with the plans said. The Reit will be managed by Azora, an independent asset manager founded in 2003 that has accumulated €2.8bn of assets across Europe. Azora refused to comment.

    Mr Paulson told the FT: “We are impressed with the Azora management and think they are well positioned to capitalise on the opportunities that are likely to arise in the Spanish real estate market.” Mr Soros declined to comment.

    If it succeeds with its IPO plan, Hispania will become the second Spanish real estate company to float since the financial crisis, after property investment company Lar España announced its intention to raise €400m two weeks ago.

    Real estate assets in Spain – which tumbled more than a third between 2007 and 2013, according to figures from the European Central Bank – have become increasingly popular among investors in recent months, as properties in the UK and Irish markets have become more expensive in the wake of international demand.

    Investment into Spanish real estate more than doubled year-on-year in 2013, to €2.7bn, according to data from Cushman & Wakefield – the highest level since the eurozone economic crisis in 2010.

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    Although there have been few European real estate IPOs in recent years, the market is beginning to stir and investors expect more in the coming months.

    Anne Breen, head of real estate research and strategy at Standard Life Investments, said: “We expect the size of the listed real estate market in Europe to increase significantly in the years ahead. One word of caution would be that investors should be prudent over less experienced managers in some of the smaller IPOs.”

    News of the hedge fund managers’ investment in Hispania comes as an increasing number of hedge funds are betting on an economic recovery in Southern Europe. Mr Soros and Mr Paulson have already taken stakes in distressed companies in Spain and Greece. Funds connected to Mr Soros bought into the heavily indebted Spanish builder FCC last month, while Paulson attracted attention for investing in Greece´s banks last autumn.

    Financial institutions in the eurozone periphery are also securing new funding at the highest rate since the economic crisis, according figures released this week. A third of eurozone bank debt issuance has come from institutions in peripheral countries so far this year.

    New enthusiasm for biotech

    Posted on 28 February 2014 by

    Lab Technician Holding Petri Dishes --- Image by © Randy Faris/Corbis

    A cure for cat allergies might not sound like the most promising starting point for the next stock market boom.

    Yet many in the UK biotech industry are hoping the planned flotation this month of Circassia – a specialist in anti-allergy drugs – will mark the return to favour of a sector long shunned by British investors.

      The Oxford-based company plans to raise £200m on the London Stock Exchange in what would be the first big UK biotech listing for years.

      Several others are also eyeing the London market amid tentative signs that the biotech fever raging among US investors is finally spreading across the Atlantic.


      Nasdaq’s bio boom

      Biotech has been among the best-performing sectors of US equity markets for more than a year, with the Nasdaq Biotech Index up 18.5 per cent so far in 2014 on top of its 65 per cent gain last year.

      More than 50 biotech companies have listed in New York since the start of 2013 with dozens more in the pipeline, according to bankers.

      The frenzy reflects rising risk appetite as the global economy recovers combined with a range of factors expected to boost long-term growth in the sector.

      These include rising demand for healthcare from the developed world, where populations are ageing and increasingly stricken by chronic diseases, as well as from newly-affluent middle classes in emerging markets.

      The pharmaceuticals industry has become increasingly reliant on smaller biotech companies to lead innovation as cost-conscious drugmakers scale back in-house research in favour of partnerships and outsourcing.

      Above all, scientific advances have raised optimism over the prospects for a new generation of medical breakthroughs – particularly the ability to spot genetic mutations that cause disease and target treatments more effectively.

      While these bullish arguments have fuelled the US boom, European investors have until now largely skipped the party. UK companies such as Oxford Immunotec and GW Pharmaceuticals have chosen to raise funds in New York over the past year in the absence of strong demand at home.


      Europe’s turn?

      But Francesco De Rubertis, a big biotech investor at Geneva-based Index Ventures, says that as the US market shows signs of peaking – some newly-listed stocks have fallen below their initial public offering price in recent weeks – local interest in European biotech is starting to grow. “There is typically a 6-12 month lag after the US peaks before European investors start to say, ‘actually, there is money to be made here’.”

      Index, which manages $3bn of venture capital in the biotech and technology sectors, has started to prepare several European life science companies for market, with London a potential location for some listings as well as Zurich, he says.

      Life sciences

      'Happy Pills' vases

      Advances in decoding aid diagnosis and treatment

      But if UK investors are to join the fray, many will first need convincing that this time is different to the boom-bust cycles that have characterised biotech stocks in the past. The last big surge came in the late 1990s, fuelled by hype surrounding the Human Genome Project – an international effort to crack the body’s genetic code.

      Just like for the dotcom companies whose rise and fall biotech mirrored, commercial dividends proved slow to materialise and UK investors were scarred by a series of high-profile failures.

      Most notorious was the scandal at British Biotech, whose market capitalisation plummeted from nearly £2bn to £40m after a whistleblower revealed that claims about a cancer wonder drug it was developing had been overblown.

      The fiasco is still often cited 15 years later as a deterrent to investment in the sector – a fact that Gabriele Cerrone, an Italian serial biotech entrepreneur, says demonstrates the difference between US and European attitudes. “Americans have shorter memories,” he says. “They are quicker to see new opportunities in sectors that have blown up when Europeans are still talking about what went wrong.”

      Mr Cerrone is hoping UK investors can be persuaded to give biotech another go after relocating from New York, where he made a fortune on several ventures. He was attracted in part by the government’s “patent box” tax break on innovation, which he says promises to help boost UK competitiveness.

      AudioMortgage rates, investing in biotech, and with-profits

      When mortgage rates rise, how bad will it be? Jonathan Eley and guests also discuss whether the UK biotech sector is set for a boom, and whether with-profits policies are worth retaining

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      Two of his companies – Gensignia, which is developing a blood test for lung cancer, and Tiziana Pharmaceuticals, which is working on a breast cancer drug with scientists at Cardiff University – are readying for possible listings on London’s junior Alternative Investment Market.


      Fear of failure

      But Mr Cerrone admits to exasperation at the difficulty of rallying support in Europe, compared with the US. “In San Francisco you can walk into a coffee bar with a good idea and walk out with funding. In London, people think nothing of investing in an unproven mineral reserve in Kazakhstan, but aren’t prepared to take a risk on medical science.”

      In many ways, the UK seems ripe for a resurgence in biotech investment. The country continues to punch above its weight in life sciences, with 14 per cent of all research papers in the past five years coming from the UK, despite it accounting for just 1 per cent of the world population.

      While the closure of big pharma research and development facilities (by AstraZeneca in Cheshire and Pfizer in Kent) have prompted hand-wringing over Britain’s research base, the losses have been offset by a growing cluster of vibrant biotech start-ups in the so-called Golden Triangle connecting London, Oxford and Cambridge.

      A report by EY, the consultancy, last year identified 400 biotech products under development in the UK – more than anywhere else in Europe and behind only the top US clusters of Boston, San Francisco and San Diego. A third of the European biotech companies in Mr De Rubertis’s portfolio are based in Britain.

      However, while the UK has no shortage of good science, financing is harder to come by. Venture funds such as Index are less plentiful than in the US and there are relatively few fund managers and analysts focused on the sector. This creates problems for companies whose high levels of risk and complex science make them daunting to generalist investors.

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      Matters will not be helped by the departure of Neil Woodford, the star fund manager and long-time biotech enthusiast, from Invesco to join a small private equity group in May, raising questions over the big stakes his Invesco funds have built in the sector.

      Dan Mahony, who manages healthcare investments for London-based Polar Capital, says the European capital pool is fragmented between different countries and lacks the scale that allows US investors to shrug off inevitable failures. “The chance of a drug getting to market from a phase one trial is roughly one in five,” he says. “Americans focus on the one success. Brits will focus on the four failures. This reduces the amount they are willing to invest, which in turn reduces the chances of success.”

      No company demonstrates this tension better than GW Pharmaceuticals, whose shares stagnated on Aim for a decade even as it made steady progress towards treatments for multiple sclerosis and childhood epilepsy. When the Wiltshire-based company needed cash last year to fund trials it sought a dual listing on Nasdaq to tap much greater US appetite for its shares. The stock has since soared from its offer price of $8.90 to $64.57, valuing the company at $958m.

      “The US has an enormous breadth and depth of investors who are extremely well educated on biotech,” says Justin Gover, GW’s chief executive. “In the UK we were relying on generalist small-cap investors. We have an audience now that understands what we are doing in a way that was not possible in the UK.”


      Go for it!

      Relative scarcity of funding has made it difficult for European start-ups to emulate the spectacular growth of multibillion dollar US biotech companies, such as Biogen Idec and Gilead, whose scale has begun to blur the boundaries with big pharma. “There is a more conservative attitude in Europe,” says Mr De Rubertis. “When a company gets to $500m in size the instinct is to look for an exit rather than doubling down to try to become a $5bn company.”

      A string of promising UK companies, such as PowderJect, Celltech and Spirogen have been gobbled up by bigger buyers long before reaching their full potential. This has left a vacuum between the two big UK pharma groups, GlaxoSmithKline and AstraZeneca, and the country’s small-scale biotech sector. Shire, the FTSE 100 speciality drugmaker, is one of the few companies to fill the gap but it barely counts as British after moving its headquarters to Dublin.

      There is a bullish tone, however, among the new generation of companies preparing to come to market. Darrin Disley, chief executive of Horizon Discovery, a genomic research outfit that this week announced plans to float on Aim, says he wants to build the UK’s biggest biotech company. “I want to show young scientists that there are companies out there with ambition; that it isn’t just a straight choice between academia and big pharma.”

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      Investors have heard these grand claims before only for the sector to under-deliver. Sceptics say the fact that European companies are belatedly jumping on the biotech bandwagon is just another warning sign that the boom risks becoming a bubble.

      But Mr Mahony says this time really could be different as the maturing science around the human genome finally starts to usher in an era of personalised medicine, in which scattergun “blockbuster” treatments are replaced by precision drugs tailored for individual patients. He predicts the trend will prove as transformational as the discovery of antibiotics in the 20th century – with biotech companies at the forefront.

      It will become clear in the next few weeks whether UK investors are prepared to back this optimistic vision. “I find it impossible to believe that in one of the richest cities in the world we cannot find enough people to invest in saving lives,” says Mr Cerrone, who has set up a base in Mayfair, central London, to plot his potential floats. “I’m going to give it a go, but if I fail, I don’t have to jump off a bridge. I can just go to Nasdaq instead.”


      UK suffers from lack of scale

      Gaining exposure to UK biotech is not easy for smaller investors – there are not enough listed companies to support dedicated funds of the kind commonplace in the US, or adequately to diversify the risk of investing in individual companies.

      Broader healthcare funds do exist, such as one run by Dan Mahony at Polar Capital, but these tend to be global in nature and are often dominated by big pharma.

      Invesco Perpetual’s star manager Neil Woodford was a big fan of both big pharma and smaller operators; his funds hold big stakes in small biotechs such as Oxford-based e-Therapeutics. However, it is not clear if his successor, Mark Barnett, will prove as committed after Mr Woodford steps down this spring – and in any case, the funds are so big that the biotech exposure is proportionately small.

      Perhaps the best proxies are two listed technology incubators which help commercialise science coming out of UK universities.

      IP Group, a FTSE 250 constituent, has dozens of medical start-ups among its 70-strong portfolio, including Oxford Nanopore Technologies, a DNA sequencing company.

      Aim-listed Imperial Innovations, meanwhile, owns 20 per cent of Circassia, the allergy drug company planning to float this month, as well as other life science spin-offs from Oxford, Cambridge, University College London and Imperial College.

      Direct investment in individual stocks is notoriously risky in the sector given that only one in five early stage clinical trials leads to a successful drug. But several companies have survived previous biotech busts to establish a following, including BTG, which is in the FTSE 250, GW Pharma and Abcam and Vectura.

      More adventurous investors could buy shares (or ETFs) in Nasdaq-quoted biotech firms, but doing so introduces an element of foreign-exchange risk, and many brokers will require you to register with the US tax authorities before trading US shares.

      European assets of Yanukovich frozen

      Posted on 28 February 2014 by

      Austria and Switzerland froze the assets of about 20 Ukrainians, including Viktor Yanukovich, the ousted president, and his interior minister, Vitaly Zakharchenko.

      The Swiss and Austrian initiative came in advance of expected EU moves to impose sanctions on members of the former government. Liechtenstein also imposed an asset freeze.

        Austria’s foreign ministry said that, following a request from the new leadership in Ukraine, it had frozen the local bank accounts of 18 Ukrainians “until further notice” in order to prevent outflows before the EU’s sanctions could be applied.

        Neither the ministry nor Austria’s central bank disclosed the value of the assets affected by the freeze.

        In Switzerland, the federal financial watchdog Finma said it had blocked the accounts of 20 Ukrainians – including members of the former regime or close associates of Mr Yanukovich – for three years. Finma also declined to reveal the value of assets affected.

        In Geneva, the prosecutor’s office said it had launched a money laundering investigation into Mr Yanukovich and his son Oleksandr.

        “A police raid led by the prosecutor, Yves Bertossa, and the finance team of the police took place on the morning of February 27 at locations of a company owned by Oleksandr Yanukovich. Documents were taken away,” the office said.

        At a press conference in the Russian city of Rostov-on-Don, Mr Yanukovich brushed aside questions about the asset freezes, saying he had no accounts abroad. He did not directly respond to allegations that his elder son Oleksandr had such interests.

        The toppled Ukrainian president added that while he personally owned a small portion of the Mezhyhirya estate north of Kiev where he resided, the rest was not “Ukrainian-owned”.

        Investigative journalists in Ukraine have in the past uncovered a web of offshore companies from Austria and other countries involved in ownership of the vast compound.

        Mr Yanukovich’s former chief of staff, businessman Andriy Klyuyev, has admitted owning enterprises in Ukraine through Austrian entities.

        Mt Gox files for bankruptcy protection

        Posted on 28 February 2014 by

        A Bitcoin trader holds a placard to protest against Mt Gox in Tokyo

        A Bitcoin trader holds a placard to protest against Mt Gox in Tokyo

        The Bitcoin exchange at the centre of a $480m heist has filed for bankruptcy protection, in a move that leaves thousands of virtual-currency investors in limbo.

        Events unfolding at Tokyo-based Mt Gox, once the dominant platform for trading and storing Bitcoin, had drawn increasing attention over the past three weeks, as a freeze on withdrawals led to a shutdown of trading and uncertainty over the whereabouts of the company’s chief executive, Mark Karpelès.

          But on Friday evening Mr Karpelès surfaced to announce that Mt Gox would seek a court-led restructuring, with debts of Y6.5bn ($64m) and assets of Y3.9bn. About 750,000 Bitcoins belonging to customers and 100,000 belonging to the company had been lost, he said, in a theft detected on February 24.

          Some virtual currency enthusiasts say that the example set by Mt Gox should encourage authorities to tighten their surveillance of this essentially unregulated landscape.

          “If you have hundreds of millions of dollars lying around, people will try to steal them, so you need adequate security,” said Karl-Friedrich Lenz, a professor at Aoyama Gakuin University in Tokyo and author of a paper on Bitcoin regulation.

          But others – particularly traders who had stored large amounts of Bitcoin at the exchange – were angry at the prospect of losing everything.

          “I’m disgusted by [Mt Gox’s] conduct throughout this whole situation,” said Kolin Burges, a developer from London who had led a determined protest for the return of “hundreds” of Bitcoins, spending much of the past two weeks on the pavement outside the company’s headquarters in Tokyo’s Shibuya district. He said he will now stay on in Japan on a visitor’s visa, before setting up a business.

          “I will be doing anything I can to ensure that anyone at the company who was to blame for this faces justice for any crimes they might have committed,” he said.

          Senior members of the Bitcoin community have claimed that the theft has exposed nothing more than the expulsion of a poorly run operator, pointing to the relative resilience of the Bitcoin price on other exchanges as the saga has developed. Prices slipped about a third in February, but Bitcoins are still trading at about 4 times the rate of six months ago.

          Yet others argue that the troubles at Mt Gox reveal flaws at the core of the Bitcoin movement. In particular, they say, the absence of a central issuing authority means that holders of virtual currencies lack support when things go wrong.

          “I knew this kind of thing would not last long,” said Taro Aso, Japanese finance minister, answering questions on the scandal on Friday morning. “I knew it would fail somehow.”

          Some argue that the troubles at Mt Gox reveal flaws at the core of the Bitcoin movement. In particular, the absence of a central issuing authority means that holders of virtual currencies lack support when things go wrong

          Mt Gox is aiming at a rebirth under a procedure known as minji saisei, or civil rehabilitation. This relatively new law, passed in 2000, was designed to ensure that businesses enjoy protection from creditors while the court seeks a buyer.

          The fact that Mt Gox has entered such a procedure suggests that there is at least some interest from third parties, said Ken Kiyohara, a Tokyo-based partner at Jones Day. That could mean that users who have deposited cash at the exchange could be in line for payouts once the rehab plan is approved. Such a process is likely to take about a year, he said.

          Meanwhile, users awaiting the return of Bitcoins may be disappointed. Experts say that it is unlikely that thefts can be traced, especially if they took place over years in small increments.

          “Transactions are happening all day, everywhere, and we don’t know which address belongs to whom,” said Ken Shishido, co-organiser of the Tokyo Bitcoin meet-up group, who had several dozen coins at Mt Gox. “The feeling is that there is nothing we can do.”

          The uncertainty is ironic, as many users gravitated towards Mt Gox not just because of its size – it claimed to have over 1m accounts, and over 500,000 verified users – but because of its registration in the developed economy of Japan.

          One of them was Roco Escalera, a 32-year-old researcher from Vigo in Spain, who held 61 Bitcoins worth $34,000 in a trading account.

          “I have €2000 left in the bank, a stable job and no responsibilities, so I’ll be doing fine,” he said. “But I hope other people with more influence and power than me can take action.”

          Standard Life and Scottish secession

          Posted on 28 February 2014 by

          In recent weeks Alex Salmond’s campaign for Scottish independence has been on the receiving end of a series of bruising rebuffs.

          Interventions first by Mark Carney, the Bank of England governor, and then by the three main UK party leaders, have undermined his case for a post-independence Scotland to share the pound.

            The European Commission has poured cold water on his hopes of swiftly securing Scotland’s entry into the EU. This week the chief executive of Standard Life, one of the largest private employers north of the border, warned that if Scotland went independent it could up sticks and leave.

            All these interventions are significant. But the one from the insurance boss, David Nish, is particularly difficult for Mr Salmond. This is not simply because of the timing, coming so soon after the others. What matters is that a corporate chief has voiced doubts about secession. This carries more weight than political gestures from either side of the debate.

            Politicians in London and Brussels may care deeply about the outcome of the referendum. But they have little to lose from speaking their minds. This is not the case with Scottish bosses. Before weighing in they must think about the consequences, not least the risk of alienating customers, employees, regulators and shareholders.

            That Mr Nish has gone ahead in spite of these concerns shows how high he perceives the stakes to be. Not only do his words deserve to be heeded, his courage should be applauded too.

            The referendum is, of course, a matter for the 5m Scots themselves. But it is in the interests both of those voters and of the other 58m inhabitants of the UK whose lives will also be affected that they go to the polls with the fullest possible knowledge of the consequences.

            It is particularly significant that this warning has come from the financial sector. This is Scotland’s biggest after oil. Historically it has been a resounding success story. Finance is both a huge employer and responsible for generating about 8 per cent of onshore gross domestic product. It is also one of the sectors with the most to lose from the Balkanisation of the UK, and the consequent need for new regulations, institutions and fiscal arrangements.

            Mr Nish’s 189-year-old business may be proudly Scottish. But the reality is that more than nine-tenths of its business comes from outside Scotland – much of it in the rest of the UK.

            His words should prompt wider reflection among the business community north of the border. Other bosses should be encouraged to enter the debate and inform voters of the possible consequences of separation. Voters need to understand what impact the break-up of the existing single market may have on transaction costs, employment and incomes.

            Business is not the only constituency that needs to roll up its sleeves. More is required from Britain’s political leadership. While the Conservatives and the Liberal Democrats have pitched in, they lack support in the key marginal constituencies, particularly in the west of Scotland. The Labour party needs to put its shoulder more firmly behind the unionist campaign.

            From the outset Mr Salmond has sought to appeal to Scots’ wallets. He has attempted to persuade them of the economic advantages of separation, while also claiming that these can be secured without jeopardising the security and advantages of the status quo. All these claims are now rightly being challenged.

            Still, while the No camp remains in the ascendant, there are four months before the referendum and no room for complacency. Mr Nish’s intervention has opened an important front in the debate. It is vital that other business leaders follow his lead.

            Hargreaves Lansdown to unveil ‘core funds’

            Posted on 28 February 2014 by

            Hargreaves Lansdown, the leading investment platform, will this weekend reveal its new range of core funds with specially-negotiated annual management charges.

            Funds known to be on the list include Invesco Perpetual Tactical Bond fund, Marlborough Multi-cap Income and Artemis Strategic Assets, which were unveiled along with the platform’s new pricing structure earlier this year.

              People familiar with the process also said that the Schroder Tokyo and Schroder Managed Balanced are on the list, as are JPMorgan Emerging Markets and Threadneedle UK Equity Income.

              Finance industry observers said it was very likely that the core funds will draw heavily on the existing Wealth 150 list, which as of late February contained fewer than 100 funds. Among the existing preferred funds considered very likely to be included are GLG Japan Core Alpha, Old Mutual UK Alpha, Aberdeen Latin America, M&G Recovery and Royal London Sterling Extra Yield.

              Mark Dampier, head of funds research at Hargreaves Lansdown, said the company would not be making any announcements about the range of funds, which has been the subject of intense speculation, before they are revealed on the company’s own website on Saturday.

              However, he did confirm that the list is exclusively actively managed funds and contains no index trackers.

              The core funds list is sensitive partly because the company has sought discounts from fund providers in return for extensive promotion to its client base of over 500,000 investors, though it says that superior investment performance is the only criteria for inclusion.

              Fidelity, one of Hargreaves’ main rivals, has launched a spoiler “price promise” offer, saying that if customers find the same fund at a cheaper total price (including the platform’s own fee) with what it describes as “key, comparable competitors” it will refund the difference. The offer will run until the end of 2014 and investors must claim the difference back in 2015.

              Doors slide open on Goldman elevator man

              Posted on 28 February 2014 by

              General Views Of Trading At The NYSE©Bloomberg

              ‘GSElevator’ never actually worked for Goldman Sachs

              Goldman Sachs employees riding the elevators can rest a little easier this week.

              The man responsible for the unflattering portrayal of the secretive firm’s bankers – which rapidly became an internet sensation and a frequent embarrassment to the bank’s senior management – is not a Goldman insider but a 34-year-old former bond salesman born in Tunbridge Wells and now living in Houston, Texas.

                John Lefevre hit headlines this week after The New York Times outed him as the author behind “GSElevator” – despite never actually having worked at Goldman.

                For Mr Lefevre it was unfortunate timing. GSElevator had just inked a substantial book deal with one of the top publishers in New York. The book, tentatively titled Straight to Hell: True Tales of Deviance and Excess in the World of Investment Banking, promises an insider’s account of the hedonistic world of finance.

                Neither GSElevator nor his publisher returned requests for comment.

                Mr Lefevre’s Twitter adventure began with a single, expletive-laden tweet sent in the depths of the traditional summer market lull two-and-a-half years ago. Within months, the account had amassed more than 100,000 followers by successfully tapping into a wave of anti-banker sentiment following the financial crisis.

                “I never give money to homeless people. I can’t reward failure in good conscience,” read one GSElevator tweet. “Some chick asked me what I would do with 10 million bucks. I told her I’d wonder where the rest of my money went,” said another.

                Early tweets included the kind of insider gossip that gave the Twitter profile an air of authenticity and piqued the interest of bankers at Goldman and beyond. “You don’t know who Woody is? He has his own jet. Google him,” read one such message, referring to Mike Sherwood, co-head of Goldman Sachs International.

                As his influence on the social media site grew Mr Lefevre began to exhibit greater caution in his tweets – deleting those that singled out prominent bankers and capital markets deals, or ones that could be used to pinpoint his true identity.

                Despite receiving a job offer from Goldman in 2010, according to news reports from the time, John Lefevre never worked for the firm

                Executives at Goldman were sufficiently concerned about the profile for the bank to begin an internal search for the Twitter user. Despite never working at the firm, people familiar with the matter said that Mr Lefevre was eventually one of a number of shortlisted candidates on Goldman’s list of possible perpetrators.

                For those who were looking, clues to GSElevator’s true identity could be found in some of the tweets themselves.

                One tweet (since deleted) about crashing a Maserati, sent wheels spinning among the close-knit group of expat bankers in Hong Kong. According to people familiar with the incident, Mr Lefevre totalled a cherry-red Maserati shortly after purchasing the luxury vehicle. Other clues included an unusually fervent affinity for the rapper, Tupac Shakur, and Alexander Hamilton, the architect of America’s fiscal union.

                British-born Mr Lefevre worked for Citigroup for seven years in Hong Kong, London and New York. Despite receiving a job offer from Goldman in 2010, according to news reports from the time, Mr Lefevre never worked for the firm.

                Mr Lefevre either walked away from the Goldman offer because of a legal dispute with his former employer, or had the offer rescinded by the bank.

                While he never worked as a bond trader or M&A banker – two of the more glamorous Wall Street positions – Mr Lefevre was on multiple syndicate desks responsible for selling fixed income products to big “buy-side” clients.

                Critics have latched on to what they see as Mr Lefevre’s duplicity in portraying himself as a well-placed insider at Goldman Sachs.

                Supporters, meanwhile, argue that the tweets and forthcoming book remain powerful satire that highlight a deep-rooted public antipathy towards bankers and the industry in which they work. Mr Lefevre told the New York Times this week that; “It wasn’t about a firm . . . It was about the culture in general.”

                While bankers who know Mr Lefevre have been dismissive of his place within the industry they also admit to a grudging respect for his social media success.

                “Most of the stories aren’t his, but they are true,” quipped one.

                New era for Versace with Blackstone

                Posted on 28 February 2014 by

                MILAN, ITALY - FEBRUARY 21: Fashion designer Donatella Versace walks the runway after the Versace fashion show during Milan Fashion Week Womenswear Autumn/Winter 2014 on February 21, 2014 in Milan, Italy. (Photo by Vittorio Zunino Celotto/Getty Images)©Getty

                Donatella Versace woke up her chief executive Gian Giacomo Ferraris on Thursday at 6.30am with a text message.

                “Fasten your seat belts!!! I’ve just signed the deal. Congratulations to all the team!!!” read the message from the designer minutes after she signed the final accord for US private equity group Blackstone to buy a fifth of her family firm.

                  For Mr Ferraris, the arrival of Blackstone as minority investor after an 18-month bid process is the start of a new era for the company, which has clawed its way back over the past five years from near bankruptcy, written off by many in the fashion industry.

                  Struck by the murder of Gianni Versace, its founder and Ms Versace’s brother, in 1997, the family had initially struggled personally and professionally to keep the seller of €6,000 gowns afloat. But all that has changed.

                  Today, its top of the range Prima Linea accounts for more than 60 per cent of its €480m sales in 2013. It made earnings before interest, tax, depreciation and amortisation last year of €69m. With Blackstone’s backing, it plans to open 70 outlets, bringing its total stores to 200 by the end of 2016 and group revenues to €800m.

                  “We can now accelerate further. This is the next stage of what we started four and a half years ago. Versace deserves another dimension,” said a beaming Mr Ferraris at the Versace headquarters in Milan. “With the backing of Ms Donatella we have demonstrated we can grow and be profitable”.

                  Another focus will be expanding its Versace Collection and Versus, lower-priced lines for clothes and all-important higher margin accessories, a segment where fashion analysts predict fast growth.

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                  “Versace is not just evening dresses any more, we are also selling proudly beautiful, desirable bags,” says Mr Ferraris, pointing out its most recent high profile advertising campaign starring Lady Gaga.

                  Mr Ferraris says Blackstone won because it “totally matched the vision of the company”, including an ambition for a stock market listing in the next three years or so.

                  Apparently, Ms Versace also hit it off with Stephen Schwarzman, Blackstone’s famously high-living founder, helping to seal the deal.

                  “We are proud of the deal, but also proud we built up a cohesive team. It is really a family here. Now is a very exciting moment,” says Mr Ferraris.

                  Fortress loses $8m on Bitcoin investment

                  Posted on 28 February 2014 by

                  Fortress Investment Group, the private equity and hedge fund manager, is sitting on losses of $8m on an experimental investment in Bitcoin.

                  The company’s annual report revealed that it bought $20m of the virtual currency in the final months of last year, making it the first mainstream investment company to list Bitcoin among the assets on its balance sheet.

                    The value of its position was already underwater by the end of December, however, and the price of Bitcoin has continued to slip this year amid scares over the underlying technology and the bankruptcy of what was once the largest virtual currency exchange.

                    Michael Novogratz, co-chief investment officer of macro funds at Fortress, was the first big hedge fund manager to reveal he owned Bitcoin last October, as the currency was attracting speculative buyers and venture capitalists were backing Bitcoin start-ups.

                    By buying the currency for its own account, Fortress not only places a small bet on its future value but also learns more about the practicality of using Bitcoin as a financial instrument in the future and about the potential for business built around virtual currency.

                    The company deemed Bitcoin too speculative, however, to put in any of the funds it manages on behalf of other investors.

                    It valued its stash of Bitcoin at $16.3m at the end of December, although that may reflect some discount for the difficulty of selling out of a large position in illiquid markets.

                    The volatile currency has fallen by a further one-quarter so far this year, according to an index of prices on Bitcoin exchanges, calculated by Coindesk, cutting the value of the stake to $12.1m at mid-Friday prices.

                    The experimental stake in Bitcoin represents a fraction of Fortress’s $2.6bn balance sheet. The company manages $61.8bn in assets and posted a 121 per cent rise in net income to $484m for 2013.

                    Fortress declined to comment on the Bitcoin investment.

                    London provides stamp-duty bonanza

                    Posted on 28 February 2014 by

                    UK Real Estate As Prices Continue To Rise©Bloomberg

                    Nearly three times as much tax was paid by property buyers in 13 square miles of central London than in all of Scotland and Wales last year, according to official figures, demonstrating the capital’s appeal to global investors and the Treasury’s efforts to increase the tax paid by wealthy owners.

                    The tax system makes the UK one of the world’s most expensive places to buy prime property, although it remains one of the cheapest to own it, providing it is not owned through a company.

                      Only Hong Kong and Singapore levied higher taxes on property buyers, while Cape Town, Nairobi, Hong Kong and Monaco imposed lower annual charges, according to a ranking of the 15 most popular property markets for buyers of a $3m new-build home by Knight Frank, the property advisers.

                      A surge of investment by foreign buyers into the prime London market – estimated to account for about half the sales of properties costing more than £1m in the year to June 2013 – coupled with increased stamp duty land tax rates, has driven up the tax take from top-end London property.

                      The UK has the highest property taxes in the world, according to figures from the Paris-based OECD. But the majority of property taxation is council tax – a relatively flat tax paid for services – meaning that those in modest properties pay far more as a percentage of the value of their home than someone in an expensive house.

                      By contrast, SDLT – which totalled £708m in Westminster and Kensington & Chelsea last year – is targeted towards expensive properties. Although properties worth £2m – of which more than two-thirds are in London – account for just 0.3 per cent of UK sales, they accounted for nearly 20 per cent of the £4.9bn raised in SDLT last year.

                      Hundreds of millions of pounds of extra tax have been generated by the 2012 introduction of higher SDLT rates and the annual charge for “enveloped” property, while capital gains tax on foreign-owned property is set to bring in £125m over the next five years.