Today’s Markets: Traders shrug off spluttering economy

Companies

Rupert Soames bids farewell to Serco

Serco (SRP) has announced that Rupert Soames will step down from the board and from his role as chief executive at the end of this year and then retire altogether from the company in September 2023, after nine years at the helm. He will be succeeded by Mark Irwin, current head of Serco’s UK & Europe division. John Rishton, chairman of Serco, said that during the selection process it was clear that “[Irwin’s] deep knowledge of Serco in the UK, Europe and Asia Pacific, as well as his prior experience working in the US and the tremendous results he has delivered for us in all his roles make him the ideal person to lead the group through its next phase of growth”.

A changing of the chairs at DFS

Living room furniture retailer DFS Furniture (DFS) announced that it will have a new chair from November. 

Chair Ian Durant will retire and will step down from the board at the company’s AGM on 4 November. He will be replaced by Steve Johnson, a current DFS board member who is an independent non-exec and the head of the remuneration committee.

DFS’ shares were up by 3 per cent in early morning trading. CA

Another supported housing Reit set to float

A new real estate investment trust (Reit) which plans to deliver housing for vulnerable people has announced its intention to float through a £150mn IPO. Independent Living Reit intends to provide specialist supportive housing for adults with learning difficulties, mental health issues or physical disabilities. Independent Living Reit said it has developed its business model – whereby it owns a portfolio of homes which are leased to housing associations – after discussions with the Regulator for Social Housing which has voiced many concerns about financial stability and quality of care from companies using a lease-based model. ML

Australia’s regulator looks at Entain

Gambling company Entain (ENT), which owns Ladbrokes and Coral, is being investigated by Australia’s financial crime agency. 

AUSTRAC (Australian Transaction Reports and Analysis Centre) said “the investigation will focus on whether Entain has complied with its obligations” under anti-money laundering and counter-terrorism financing legislation. 

This comes after the company was fined £17mn in August by the UK Gambling Commission for social responsibility failures and AML issues. CA

Netflix is getting serious about gaming

Over the weekend, Netflix (US:NFLX) announced plans to create three mobile games in partnership with Ubisoft. The games will expand on previous Ubisoft releases Valiant Hearts, Mighty Quest and Assassin’s Creed and will be “exclusively available on mobile” to Netflix subscribers.

Netflix has already released a few games on mobile, including one based on the Stranger Things TV series. However, this Ubisoft announcement represents a big step up in its ambitions. Assassin’s Creed is a hugely popular franchise and the game is going to be launched in parallel with a new Assassin’s Creed live action TV series.

Netflix is clearly serious about the gaming project. It sees the future of storytelling through both games and TV. Whether it will be able to attract enough gamers for the investment to be worth it is uncertain? Making great games is difficult and there is lots of competition for gamers. Both Apple and Amazon have failed to break into the gaming market in the past. The odds for Netflix are slim. AS

Read more:

Gaming: not so recession proof

Tech investors should ignore the economy

Netflix and S4 Capital grapple with content issues

Grainger’s share price bumps following rent success

Grainger’s (GRI) share price nudged up 2 per cent after it revealed that it had hit record occupancy for the rental arm of its business. The residential developer said that 98.2 per cent of its rental assets were occupied and that rental income had increased 4.5 per cent in the year to date.

Grainger is transitioning the majority of its business towards a rental model in a bid to become a real estate investment trust (Reit), a status which would make it exempt from corporation tax. Back in May, the company said it hopes to reach that goal “in the next three years”. ML

Lending strike on the way?

There have been concerns recently raised by UK small businesses that a lending famine appears to be taking hold. The FCA recently warned banks to improve their treatment of small businesses after complaints that many banks were not offering basic protections to small businesses such as offering payment schedule plans or identifying vulnerable customers. Indeed, up to a third of small businesses surveyed reckoned that banks would not lend to them anymore on reasonable terms. The question is whether non-traditional financial lending, such as invoice lending or online banking service, can take the place of High Street banks.

According to Sonovate, a payment solutions provider, only around 5 per cent of businesses actively use supply chain finance to cover their short-term lending requirements. What might be at the root of the problem is hard to pinpoint. There is a similar trend reported in the US, where traditionally cash hungry start-up businesses have turned to bank lending, rather than venture capital, to finance growth. Therefore, it could be that banks are simply seeing more profitable lending opportunities, than to traditional small businesses, in an environment where interest rate rises are squeezing venture capital and private equity out of the market. JH

https://www.investorschronicle.co.uk/news/2022/09/12/today-s-markets-markets-shrug-off-spluttering-economy/