M&A market to suffer private equity slump

Listed companies have been under the cosh from private equity groups after
the record £9.3bn of deals completed in the final quarter of 2006, but
completions for the UK private equity market have dramatically slowed in the
first quarter of 2007.

Adrian Balcombe, corporate finance partner at Deloitte, said: ‘Fewer floats
and the noticeable reduction in dual track processes shows that secondary and
trade buyers are currently the preferred exit route.’

Only £3.4bn of proposed buyouts were rubber-stamped, the lowest quarterly
performance for three years according to CMBOR, a major provider of analysis on
the UK buy-out market founded by Deloitte and Barclays Private Equity.

Balcombe cited the current healthy position of trade buyers and the ‘wall’ of
money created by the 2006 record fundraisings as the key drivers: ‘We are seeing
some signs of restraint in the private market with deal multiples going down for
mid-market deals.’

Of the total value of completions, the proportion of public to privates has
fallen significantly from the record high.

After a very slow start in 2006, the public to private market surged in the
final quarter to reach £6bn from 25 buy-outs. This year, public to privates
total just six with a value of £513m, according to CMBOR figures.

Tom Lamb, co-head of Barclays Private Equity, added: ‘It is astonishing to
see how little private equity completions there have actually been in the first
quarter given the frenzy surrounding a succession of high profile ‘take-private’
candidates such as Sainsbury’s, Alliance Boots, Pearson, Kingfisher, Whitbread,
Compass, and Cadbury.’


FSA issues ‘due care’ fine against FD

David Whistance, the former finance director at stockbroker Williams de Broë,
has been fined £30,000 by the Financial Services Authority for ‘failing to
exercise due skills care and diligence in carrying out his role’ when the threat
of insolvency loomed over the business.

This was the first such fine imposed by the FSA for such an offence against a
senior executive from a sizeable business. Whistance was blamed for Williams de
Broë making provisions of £66.3m in its accounts for 2004 and 2005 against
assets it said were ‘irrecoverable’.

The FSA said: ‘Mr Whistance’s failure to carry out his responsibilities to
the required standard resulted in the firm being unable to monitor its own
financial position and comply with its regulatory requirements.’

Shell pays $353m to settle reserves lawsuits

Royal Dutch Shell is to pay out $353m (£178m) to non-US investors to settle
lawsuits pertaining to its 2004 reserves restatement scandal. In what was one of
the biggest scandals in the group’s 100-year history, Shell was forced to cut
oil and gas reserves by over a quarter as it emerged that the reserves had been
overstated and incorrectly accounted for. Investor groups that sued Shell
included; pension funds and VEB, which represents individual shareholders in the
Netherlands, and the Shell Reserves Compensation Fund. Iain Richards, head of
European governance at Morley Fund Management, a Shell shareholder, said the
settlement marked ‘an important step in the process of drawing the Shell
reserves misstatements issue to a close’.

Imax still can’t ‘see’ accounts picture

Imax, the Toronto-based giant-screen movie theatre maker says it cannot
predict when it will complete its accounting review and file its financial
statements. The company could only say it would do so as soon as practicable. It
is facing delisting from the Nasdaq stock exchange, but warned in March that it
would delay filing its annual report because it was evaluating accounting errors
that took place between 2001 and 2006. Earlier this month, Imax said it had
broadened its accounting review based on comments from the SEC and the Ontario
Securities Commission.

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