Mark Kleinman: Britain should steel itself for unwanted status among G7
Mark Kleinman is Sky News’ City Editor and the man who gets the Square Mile talking in his weekly Morning Wire column
Britain should steel itself for unwanted status among G7 nations
Sajid Javid, Greg Clark, Andrea Leadsom, Kemi Badenoch and now Jonathan Reynolds: the list of business secretaries handed the assignment of salvaging Britain’s fast-disappearing steel industry is in danger of becoming longer than the number of meaningful steel plants in Britain.
Last week’s news that Jingye Group, the Chinese owner of British Steel, the country’s second-biggest producer, has initiated a process to make up to three-quarters of its workforce redundant and close its two blast furnaces at Scunthorpe has sparked a fresh bout of hand-wringing about the UK’s industrial capability.
Focus on Donald Trump’s introduction of draconian tariffs on the industry and you’d be missing the point, though: this is a crisis years in the making, and arguably the most surprising thing is that British Steel (the company) still exists at all. The company’s liquidation in 2019 after a stint under the ownership of Greybull Capital sparked a frantic search by the then Conservative government to find a rescuer.
Jingye claims to have invested £1.3bn into the business since buying it, despite which it continues to lose the thick end of £1m every day.
Its survival hopes now rest on whether a £2bn project to replace the blast furnaces with electric arc furnaces which produce greener steel gets the go-ahead.
For months, Jingye has been in talks with government about the possibility of a £1bn taxpayer grant to help facilitate that transformation plan.
It emerged last week that Reynolds had written to the company to offer a £500m grant instead. That would leave Jingye facing a £500m black hole in the funding plan that its Chinese parent appears unwilling to fill. Questions need to be answered about why that offer was made in the almost-certain knowledge that it would be rejected.
Given the government’s description of the proposal as “generous”, doubling it in order to meet Jingye’s demand seems unlikely. Nationalisation remains a last-ditch option, and would please union officials calling for the company’s preservation. Whether it would offer better value for money than using more of Reynolds’ £2.5bn steel industry fund to keep it in private ownership remains to be seen.
Revolut ‘admin’ charge will stick in the throat – and wallet
Nice work if you can get it. Name Britain’s most successful start-up of the last 10 years, and you’d be hard-pressed to find a more obvious candidate than Revolut.
Built from a standing start in 2015 by Nik Storonsky and Vlad Yatsenko as an international money exchange and transfer app, the business now spans a vast array of financial and related services.
Boasting more than 40m customers, the scale of its profitability last year suggests that doubling its recent valuation of $45bn within the next couple of years is far from fanciful.
That valuation was crystallised by a secondary share sale which has just closed with more than $1bn of stock having changed hands.
“We’re delighted to provide the opportunity to our employees to realise the benefits of the company’s collective success,” Storonsky said last August.
Storonsky himself sold the best part of $400m of Revolut shares as part of the round, with investors including Mubadala, the Abu Dhabi sovereign wealth fund, joining the company’s investor register, and Coatue and Tiger Global adding to their stakes.
Schroders’ decision last week to increase its valuation of Revolut stock held in an investment trust once run by Neil Woodford – implying the company is now worth $48bn – adds further momentum to the fintech’s valuation story.
Extraordinarily, though, investors who sold shares in the recent secondary round were charged a 2% fee by the company to do so, I’m told. A Revolut spokesman cited the administrative costs of facilitating the process, and disputed my back-of-the-envelope calculation that it had generated $20m from the fee but for loyal employees and backers of a business which can rightly claim some extraordinary achievements, that must stick in the throat – and in the wallet.
Firstminute investors to get some cash back any minute now
Firstminute? How about calling it Anyminute Capital instead? Lastminute.com co-founder Brent Hoberman’s vehicle for writing start-ups’ first cheque – and backer of companies such as Wayve, the autonomous vehicle developer, and Floom, the online florist network – has just reached a landmark moment.
People close to Firstminute say it has just written to investors to notify them that they are about to receive a cheque of their own, in the form of its first capital return.
The portfolio company responsible for the windfall, I hear, is N8N, a German-based workflow automation platform which has grown rapidly after adopting a more artificial intelligence-friendly approach.
Last week N8N was reported to have raised $60m at a valuation of about $270m, with Highland Europe leading the funding round and HV Capital and Sequoia among the funds following their money.
Firstminute Capital is said to be monetising part, though not all, of its stake, which will result in a sum equivalent to its entire fund being handed back to limited partners.
That’s a big win for Hoberman and his fellow Firstminute founder, Spencer Crawley, who launched the firm in 2017. Backed by the likes of Sir Richard Branson and scores of prominent tech company founders and angel investors, the onus is now on some of Firstminute’s earlier UK-based investments to begin delivering returns, any minute.