PRESS DIGEST - Financial Times - May 14

Financial Times

UK SUFFERS HEDGE FUND BLOW

Led by France and Germany, European Union countries plan to push ahead with controversial new regulations on hedge funds, despite British pleas to defer next week's vote in Brussels. British diplomats attempted on Wednesday to convince Paris and Berlin that David Cameron's new coalition government required more time to prepare for Tuesday's meeting of EU finance ministers but both the French president and the German chancellor are keen to establish a regulatory framework. London is Europe's main centre for private equity as well as home to 80 percent of its hedge fund industry and the City is opposed to the measures, which it views as being excessively onerous.

OSBORNE TO CHAIR BANKING COMMITTEE

Chancellor of the Exchequer George Osborne is to chair a new cabinet committee on banking, which is expected to thrash out the conflicting policies of the Tory and Lib Dem coalition partners. The committee has been established to ensure that the Lib Dems have adequate involvement in banking policy and will compliment the traditional division of responsibilities between the Treasury and the department for business. Details of the new cabinet committee, including its membership, were still being finalised on Thursday and it has also emerged that the chancellor is working with Business Secretary Vince Cable to agree the terms of reference and membership of a new commission on systemic risk.

CGT PLANS IRK PRIVATE EQUITY SECTOR

The private equity industry is set to lobby ministers for an exemption from the planned increase in capital gains tax. An agreement published earlier this week by the new coalition government included plans to reduce income tax for low and middle-income earners and pay for this by "taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities". Industry body The British Private Equity & Venture Capital Association said it would be bizarre if capital gains were taxed as non-business gains, adding that the "generous exemptions for entrepreneurial business activities" should obviously be applied to private equity and venture capital.

BORROWERS' HOMES STILL AT RISK DESPITE FALL IN REPOSSESSIONS

The Council of Mortgage Lenders has urged the new government to maintain support for homeowners, warning that many borrowers still risk losing their properties despite repossessions in the first quarter of 2010 falling to the lowest level in two years. In the first quarter of this year repossessions fell 7.5 percent to 9,800, with the number of borrowers in arrears also falling. The previous government introduced a number of measures aimed at limiting repossessions and the CML stressed the importance of continuing to "fund the support of mechanisms that are proving effective".

INVESTORS REBEL OVER DIRECTORS' EARNINGS

Materials science company Cookson Group (CKSN.L) saw its remuneration report passed by the narrowest of margins, being the latest company affected by UK institutional investor dissent over pay for FTSE 250 company chief executives. The group secured just 51 percent of votes from its shareholders, who include Standard Life (SL.L), AXA (AXAF.PA), Lloyds Banking Group (LLOY.L), Legal & General (LGEN.L) and Aegon (AEGN.AS), while 32 percent voted against the bonus scheme for chief executive Nick Salmon.

STANCHART WINS INDIAN LISTING APPROVAL

British bank Standard Chartered (STAN.L) has announced plans to raise between 336 and 504 million pounds from Indian investors, after winning approval to become the first foreign company to list on the Indian stock exchange. The Mumbai listing is expected to help Standard Chartered further its ambitions to expand in Asia's third biggest economy, which helped the bank's Indian operation deliver 1.06 billion dollars in operating profits in 2009. Finance director Richard Meddings said he hoped to raise enough capital from the listing "to ensure the instrument itself is liquid so that people can trade within it". UBS is among the named advisers on the market listing. Meanwhile, Standard Chartered has also indicated it would be equally interested in exploring a listing in China.

CREST NICHOLSON APPOINTS ADVISER FOR POSSIBLE SALE

Housebuilder Crest Nicholson [CRTNC.UL] has confirmed it has appointed financial advisers from a bank to assist the heavily indebted firm "in reviewing its options for the future with its stakeholders". An industry source said the selection of Morgan Stanley, from a short-list of three investment banks, indicated Crest is eager to start an auction to sell its business in the coming months. The source said many stakeholders would be seeking the "authority of a bank" to obtain the best deal on "whatever piece of debt or equity they hold". Meanwhile, some operators in the house building sector have pointed out that a takeover of Crest is more about management disaffection than a broader industry catalyst driving consolidation.

3I BACK IN THE GAME AS FINANCES RECOVER

Michael Queen, chief executive of private equity group 3i, has said that 3i is returning to deal-making after resolving its financial problems and returning to profit with pre-tax profits of 159 million pounds. Queen said 3i's financial position had "transformed", with net debt falling from 1.91 billion pounds 12 months ago to 258 million pounds at the end of March 2010. Queen said 3i's pipeline was "the strongest it has been for 18 months" and that 3i was planning to add to its dealmaking teams in China and India.

LUMINAR WARNS ON COVENANTS

Shares in nightclub operator Luminar LMR.L fell 13 pence to 27 pence on Thursday after the company warned that it could breach covenants if trading continued to deteriorate. Luminar also announced that Robert McDonald, its finance director, had left the firm. An increase in youth unemployment has reduced demand among Luminar's target market of 18 to 24-year-olds. Luminar reported a pre-tax loss of 110.2 million pounds for the year to February 25 compared with a 10.5 million pound profit in 2009. Chief executive Simon Douglas said Luminar had begun a rigorous efficiency drive.

FURTHER DECLINE IN REGIONAL ADVERTISING AT TRINITY MIRROR

Shares in newspaper publisher Trinity Mirror (TNI.L) dropped 12 percent on Thursday following its announcement that a decline in advertising at its regionals arm gathered pace in March and April. Group revenue fell five percent compared to 2009. Advertising revenue also fell five percent in the 17 weeks to May 2 compared to a similar period last year. Advertising revenue at Trinity Mirror's regional division fell ten percent in March and April, after falling six percent in January and February. Trinity Mirror said its March acquisition of Guardian Media Group's regionals arm was likely to become profitable later in 2010.

Prepared for Reuters by Durrants