FTSE starts with modest gains

The FTSE 100 has started the day with modest gains as investors hope it extends its winning streak to a seventh day.

The index of blue-chip London firms rose by more than 50 points after opening, before a dip to 7688, up 15 points from yesterday’s close.

Miner Glencore has been the top riser, after its shares fell yesterday as a $23 billion mega-merger proposal was rebuffed by Canadian rival Teck.

Investment businesses Abrdn and St James’s place are also among the top risers following the £839 million merger of Rathbones and Investec’s UK wealth and investment arm.

Rathbones CEO: ‘too early’ to talk about job cuts, but change is inevtiable

Rathbones CEO Paul Stockton said it was too early too talk about whether his company’s acquisition of Investec’s UK wealth and investment arm would lead to job cuts in the City, but also noted that some sort of personnel change with a deal like this was inevitable.

“This deal is about growth opportunities and there is an awful lot of talent in this organisation we want to work with,” he said.

“Inevitably when you have an organisations coming together with similar size and busienss, there will be changes to make, but it’s way too early to be talking about details like that.”

Massive insurance writedown hits Saga bottom line

Self-described “superbrand for older people” Saga returned to profit on an underlying basis in 20222, but its overall bottom line was hit by a £269 million writedown of its insurance business because of tighter regulations.

Revenue jumped by 54% to £581.1 million, thanks mostly to the return of travel, with revenue at Saga’s travel business growing tenfold.

This helped the group report underlying profit of £31.5 million, compared to a £6.7 million loss a year earlier.

However, Saga’s accounts also included a £269 million impairment cost for its insurance business. The group said that new regulations from City watchdog the FCA, plus a “highly competitive environment,” made it difficult to make a profit.

As a result, Saga switched strategy on car insurance to a lower-margin approach. Because of the reduced profitability from this strategy, it conducted a review and wrote down the insurance business by £269 million.

In order to repay its bond obligations, Saga will borrow £50 million from its chairman, Sir Roger de Haan.

FTSE 100 seen higher after strong US session

The FTSE 100 index is set to continue its strong run of recent days, with CMC Markets expecting London’s top flight to open 20 points higher at 7693.

Yesterday’s session was dominated by stocks from the energy sector as BP and Shell rose 4% on the back of Brent Crude’s surge towards $85 a barrel.

Banking stocks also did well as the surprise move by OPEC+ to cut output raised expectations that interest rates will need to stay high to combat inflation pressures.

US markets were higher yesterday as the Dow Jones Industrial Average rose 1% and the S&P 500 by 0.4%.

Virgin Orbit files for bankrupcy

Virgin Orbit has filed for bankruptcy after the beleaguered satellite launch business was unable to attract enough funding to secure its future.

The company said in a statement: “As of December 31, 2022, we have not generated positive cash flows from our operations or generated sufficient revenues to provide sufficient cash flows to enable us to finance our operations, and may not be able to raise sufficient capital to do so.”

Last week, the firm, which was launched by billionaire Richard Branson, abruptly sacked 85% of its workforce, amounting to nearly 700 employees as a result of what it called its “inability to secure meaningful funding.”

“We have no choice but to implement immediate, dramatic and extremely painful changes,” Virgin Orbit chief executive Dan Hart told employees, according to CNBC.

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WANdisco renews deal with BMW

WANdisco has said it has renewed its contract with BMW as the struggling tech business seeks to shore up its client base amid an internal investigation into fraud.

BMW, which has been a WANdisco customer since 2016, has agreed to a continued multi-year license engagement with WANdisco and accompanying support service.

Combined with a deal with automative circuit maker Maxim Integrated, the agreements are set to be worth £1 million.

WANdisco said: “BMW Group has been a WANdisco customer since 2016. WANdisco technology is a critical part of BMW’s software engineering infrastructure, relied upon by its globally distributed development teams.”

It comes just a day after the firm’s CEO and CFO abruptly quit the board. WANdisco continues to be suspended from the London Stock Exchange.

Rathbones to merge with Investec’s UK wealth arm in £839 million deal

City wealth manager Rathbones is set to combine with Investec’s UK wealth and investment arm, creating a firm that would manage around £100 billion worth of funds.

Rathbones will issue new shares which will be offered in exchange for shares in the Investec wealth and investment division, meaning the Investec Group will hold a 41% stake in the enlarged Rathbones. This suggests a value of £839 million for the Investec wealth business.

The new business would be the UK’s biggest discretionary wealth manager.

“The combination of Investec W&I UK and Rathbones brings together two businesses which have a long-standing heritage in UK wealth management and closely aligned cultures,” Investec CEO Fani Titi said. “The strategic fit of the two businesses is compelling with complementary strengths and capabilities to enhance the overall proposition for clients.

“This will be supported by the strategic partnership which offers attractive growth and collaboration opportunities for both groups. The transaction represents a real step-change and long-term opportunity for our UK wealth strategy, underscores our commitment to the UK wealth management market and enhances our UK business as a whole.”