Eurasian Natural Resources Corp

Andrew Hill

For a breed that is rarely found, sleeves rolled up, trying to unblock the U-bend, investment bankers are remarkably fond of plumbing metaphors. Around this time of year, they usually rush to point out just how full their “pipeline” of deals is. (One optimist told the FT this week the very size of this pipeline might itself prove to be a problem.)

The implication is that if some way could be found to clear the impediments, initial public offerings and acquisitions would come pouring out. This wishful thinking leads to some sharp-elbowed lobbying for changes to rules that supposedly deter such transactions. Bankers – and, to be fair, some entrepreneurs – would, for instance, like more flexibility to bring to market companies with a lower “free float” of shares (allowing owners to retain a larger stake). 

John Gapper

Richard Lambert’s piece on Vallares and the reputation arbitrage that the £1.3bn investment vehicle is pulling off by listing on the FTSE 100 is well worth reading. It raises serious questions about how London financiers are exploiting index funds.

As Sir Richard, a former editor of the FT, points out, Tony Hayward and Nat Rothschild are pulling a neat trick by promising investors they can release the “trapped value” of commodity groups in far-flung countries with murky corporate governance:

You unlock this value by putting a respectable board of directors on top of the notepaper, by appointing managers with a strong following in financial markets, by pledging to follow all relevant corporate governance codes and by listing the shares on the London Stock Exchange, preferably on a scale that gets them into the FTSE 100 index. Suddenly investors who might previously have run a mile are queuing up to buy.