RUTH SUNDERLAND: Digging deep Down Under with mining company BHP’s disappointing move
When your nickname is ‘The Big Australian’, it’s a clue as to your status in national life. No, not Crocodile Dundee or David Campese, but BHP, the quintessentially Aussie mining company.
The plan to move its main stock market listing to Sydney is not as emotive in the UK as Unilever’s abortive attempt to move to Rotterdam, which was scuppered after campaigning by this newspaper and opposition from shareholders.
BHP only listed here as recently as 20 years ago when it merged with Billiton of South Africa. It has no mining operations in the UK and is in reality a brass plate presence with an office in central London.
BHP only listed in the UK as recently as 20 years ago when it merged with Billiton of South Africa
The global headquarters are in Melbourne and UK beneficial shareholders account for only around 10pc of the register. Activist investors Elliott have been pressing BHP bosses to consolidate the listing, but in London.
So why choose Sydney? BHP signed undertakings to remain an Australian company twenty years ago but the real reason is that the Aussie-listed shares trade at a premium to their London counterparts. That is partly because of kinder tax treatment of dividends Down Under.
We have Gordon Brown to thank for the stripping away of dividend tax credits for pension fund investors, back in the days of New Labour. Another factor is that politicians in Australia, including the Prime Minister Scott Morrison, are not shy of speaking out in defence of their companies. What a contrast with their laissez-faire brethren here.
UK investors will still be able to hold shares, but the company will fall out of the FTSE100, so will no longer be included in tracker funds. All that said, BHP’s move is still disappointing, and a blow to the status of London as a financial centre, particularly at a time when the stock exchange is trying to attract new listings post Brexit.
Aged 41, private equity prodigy Shonnel Malani is already chairman of defence company Cobham and on the board of another, Laird. If Advent International, the US private equity house where he is a managing director, succeeds in swallowing Ultra Electronics, his sway over the sector will be even greater. It is an impressive achievement for the former investment banker, a Harry Potter fan, to chair a UK defence company barely into his forties.
The robust jobs market is another sign of the economy rebounding as Covid restrictions ease
Mr Malani’s peers are two or even three decades older. Neil Johnson, the chairman of Qinetiq, is 71, began his Army career at Sandhurst and commanded the 4th Battalion Royal Green Jackets. In the commercial world, he is a veteran of the engineering and auto industries. The chairman of Senior, which has resisted private equity predators, is Ian King, 65, a long serving former chief executive of BAE Systems. Sir Roger Carr, 74, a renowned industrialist and stalwart of corporate Britain, is in the chair at BAE.
At Rolls-Royce, 70-year-old Sir Ian Davis, formerly of McKinsey and the Cabinet Office, steps aside next month. He makes way for one of the country’s most respected businesswomen, Anita Frew, 64, chairman of Croda, a director at BHP and former deputy chair at Lloyds Bank.
Perhaps Mr Malani is a veritable wizard and Muggle rules don’t apply. But defence is a highly sensitive sector where long experience and seasoned judgment are thought to count. Private equity is breaking the mould.
The robust jobs market is another sign of the economy rebounding as Covid restrictions ease. Vacancies are at a record high and the annual growth in average pay, albeit from a low comparator, was a stonking 7.4pc or 8.8pc including bonuses. The balance of power, at least in some sectors where there are staff shortages, has tilted in favour of employees, for the time being.
One recruitment specialist opined that businesses must ‘demonstrate values that mirror candidates’ interests by developing inclusive company culture that fosters loyalty’. Whatever that means in practice, once upon a time a good pay packet and promotion prospects were considered sufficient.
Employers now are being told they have to offer flexible working in future or risk being shunned by talented staff. Covid has prompted a wholesale rethink about work but the long-term result is unlikely to be flexible woke Nirvana. The primary purpose of business is serving customers and making profits. Working practices need to flow from that.