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On the money

Pandemic predators eye up UK firms

Morrisons is the subject of a £6.3bn bid. Shutterstock

Will the American private equity group Fortress succeed in its attempt to buy Morrisons, Britain’s fourth biggest supermarket chain? Maybe not, says Alistair Osborne in The Times. Its biggest shareholder, Silchester, has what is “close to a blocking stake” at 15.1%, and it doesn’t want to accept the £6.3bn bid.

Dream on, says Private Eye. MPs, trade-union leaders and some media commentators – aghast at the incursions of mainly US-based private equity funds such as Fortress over the past 18 months – may think the beleaguered food retailer can remain independent. But it will go in the end. The “masters of the private equity universe” have been helped by a “slow but relentless” switch in the ownership of listed UK companies from domestic to foreign shareholders. The latter, it argues, care little about the politics of buyouts or their consequences, only about the price.

Thirty years ago foreign ownership of UK-registered listed companies was just 13% by value. By 1997 it was more than 25%. Now it could be as high as 65%-70%. Seven of the top 10 investors in Morrisons are US or European-owned managers – and for Morrisons, “read almost any other private equity FTSE target”.

Given low UK stock-market valuations relative to the US, and record private-equity firepower of £1.7tn, the “pandemic predators” may remain on the rampage for some time.

Future-proofing Facebook

Facebook boss Mark Zuckerberg. David Paul Morris/Bloomberg

Facebook posted a surge in profits and revenues this week, providing more evidence that the pandemic shift to digital advertising is here to stay. But with 98% of its revenues generated by ads on its flagship social network, Blue, as well as Instagram, WhatsApp and Messenger, Facebook is quietly diversifying beyond social media.

According to The Economist, Mark Zuckerberg’s company might still be snapping up smaller rivals, as it did with Instagram in 2012, were it not for the attentions of trust-busters. Instead the company is “placing a number of big bets”. The first is on the “creator economy”, which lets people make money from digital works such as videos or newsletters – a sector where it has “fallen behind” rivals such as TikTok and YouTube.

The second bet concerns e-commerce. Facebook hosts 1.2 million online shops on Blue and Instagram, and has introduced a way to let buyers try on clothes virtually. Among other initiatives, it plans to link its Shops offering with Marketplace, its existing peer-to-peer trading service. It also aims to turn WhatsApp into a vehicle for chat-based “conversational commerce”.

The “biggest gamble”, though, is on the so-called metaverse, which combines the physical world with a digital one. In recent years Facebook has made several virtual reality-related acquisitions, most recently BigBox VR, giving it control of a hardware platform for VR and its sibling AR (augmented reality). Zuckerberg, says The Economist, envisages the metaverse “as a virtual space where people live and work, in keeping with a dream that geeks have harboured since 1992”. That’s hardly without risk. Should users seem “on course to spend 35 hours a week immersed in its virtual world, rather than 35 minutes a day, this could invite regulation that actually bites”.

Smells like tontine spirit 

For a century or more, tontines have been largely a topic for TV shows and cinematic black comedy, from M*A*S*H to The Simpsons. But “a growing chorus of academics and actuaries” think it’s time to give them another chance, says the FT’s Lex column. The schemes involve individuals pooling money and receiving an annual payment until they die, with the remaining pot going “to the last man or (actuarially more likely) woman standing”. Researchers say they typically pay out more per dollar invested than an insurance policy, with less costly regulation. Tontines “are not so different to annuities, except a saver rather than an insurer benefits from residual capital”.