The week in investor relations: Robinhood IPO plans, Canadian Pacific Railway in M&A mega-deal and the 100-hour working week
– Robinhood is building a platform to ‘democratize’ IPOs, including its own, reported CNBC. The platform would allow users of its trading app to snap up shares alongside Wall Street funds, the news organization noted, citing ‘people familiar with the matter’. The move could further erode Wall Street’s grip on stock market flotations, it added, making it easier to implement for Robinhood’s own IPO, given how companies and their investment bankers tightly control allocations to investors in new listings. CNN reported this week that Robinhood had confidentially filed its own plans to go public.
– Burberry lost a Chinese brand ambassador and its hallmark tartan design was scrubbed from a popular video game, making it the first luxury brand assailed by the Chinese backlash against western accusations of abuses in Xinjiang, reported Reuters. The high-end designer is a member of the Better Cotton Initiative, which promotes sustainable cotton production. The group said in October it was suspending its approval of cotton sourced from Xinjiang, citing human rights concerns. This week the UK imposed sanctions for alleged human rights abuses in the western Chinese region, and China retaliated with its own sanctions against organizations and individuals over what it called ‘lies and disinformation’ about Xinjiang.
– Goldman Sachs CEO David Solomon addressed the bank’s 34,000 staff globally this week to tell them he took complaints about ‘inhumane’ 100-hour weeks ‘very seriously’, reported CityAM. The video was a response to a survey presented to the bank last month that has since been widely shared. It showed that employees had worked 98 hours per week on average since January – with one week in February clocking an average of 105 working hours – and got just five hours sleep per night. Expressing plans to hire more junior staff across Goldman Sachs’ investment banking faction, Solomon said the issue ‘is something our leadership team and I take very seriously.’
– Bloomberg reported that H&M had also been caught up in the spat over Xinjiang, with the retailer’s outlets appearing to have been removed from Apple Maps and Baidu Maps searches in China on Friday. The move follows the company being blasted by China’s Communist Youth League and the People’s Liberation Army after social-media users dug out an undated statement about accusations of forced labor in the region’s cotton-picking industry. The statement appears to have since been removed from H&M’s website, added Bloomberg.
– CNBC reported that Canadian Pacific Railway said it has agreed to buy Kansas City Southern for $25 bn in a deal to create the first rail network connecting the US, Mexico and Canada. It is the biggest M&A deal launched in 2021. Kansas City Southern’s board has approved the bid and the two companies have notified the US Surface Transportation Board to seek the agency’s required approval. Canadian railroad operators’ attempts to buy US rail companies have met with limited success because of antitrust concerns. The deal comes amid expectations of an increase in US-Mexico trade following Joe Biden’s replacement of Donald Trump as president.
– Major dual-listed Chinese technology shares trading in Hong Kong were ‘hammered’ on Thursday, reported CNBC, amid fears some companies could be de-listed in the US. Stocks including Alibaba, Baidu and JD.com fell a day after the SEC adopted the Holding Foreign Companies Accountable Act, which was passed by the Trump administration.
– The Wall Street Journal (paywall) noted that scores of US fund managers are being required to comply with new EU rules on climate and other sustainable-finance issues, meaning they have to disclose the potential harm their investments could do to the environment and society. ‘There are many issues to be resolved; it is causing anxiety,’ said Rick Lacaille, global lead for ESG investing at State Street. In the US, the Biden administration is taking the first tentative steps toward imposing similar rules. The SEC is already focusing on climate-related disclosures by companies. Europe’s new Sustainable Finance Disclosure Regulation requires banks, private equity firms, pension funds, hedge funds and other asset managers to comply with a range of ESG requirements. The regulation applies to all funds, even if they don’t sell themselves as sustainable.
– According to the Financial Times (paywall), senior City of London executives have warned the UK government not to ‘gold plate’ US-style corporate governance rules. Ministers recently unveiled reforms to clamp down on fraud and encourage greater boardroom responsibility following a series of corporate failures. Sir Win Bischoff, former chair of Lloyds Banking Group, warned against gold plating the Sarbanes-Oxley regulation that has worked well in the US. These rules – which add greater director liability for fraud and accounting errors – are similar to the new UK government proposals. ‘What is proposed looks like going further in that, [in effect], attestation is made by all board members with personal liability,’ Bischoff said. Anne Richards, CEO of Fidelity International, worried that holding non-executive directors personally liable for accounts ‘risks putting off quality potential candidates who simply feel it is not worth the risk.’