A new listing should be a time for celebration, but Ninety One’s maiden voyage as a stand-alone entity came just as the world was piling into the Covid-19 lockdown, and breaking out the champagne might have been a bit inappropriate.
Instead of reflecting on its 29 years of success as Investec Asset Management and looking forward to a future free of the mother ship, Ninety One was faced with markets collapsing around its ears and the need to pivot to remote working at speed.
In his CEO’s review, Hendrik du Toit points out that the company was able to grow in the year, get the demerger, listing and rebranding away on schedule, and move more than 1,000 people to working from home without a major hiccup, which demonstrates that this is a robust, experienced and well-run operating platform.
Its numbers were looking strong at the end of the calendar year, but took a beating in the three months to March as the impact of the pandemic hurled markets into turmoil.
Du Toit emphasises that his investment teams have been around the block a few times, and with 21% employee ownership Ninety One’s people have plenty of skin in the game. He believes they will be able to take full advantage of the opportunities for alpha generation that the unprecedented volatility is bound to offer in the coming year.
The company has an excellent reputation, which has led to strong and lengthy client relationships, and this should put it in great shape to emerge from the crisis in rude health.
Jaguar Land Rover: Landy faithful need defender
Spare a thought for the automotive industry as sales plunged off a cliff in April. With dealers closed and potential buyers vanishing, Jaguar’s sales for the month in the UK dropped 85%, while Land Rover was even worse, with a mere 79 sales in the month, a drop of a fairly terrifying 99%. Production came to a grinding halt until it reopened its Solihull factory last week with a whole raft of social distancing and employee safety measures in place, but the future for its 40,000 employees and its legion of suppliers looks far from secure.
Jaguar Land Rover (JLR) is reported to be burning through cash at a rate of £1bn a month, and its owner Tata is under pressure to use all its resources to prop up its Indian operations. JLR does not qualify for the UK government’s corporate paper scheme, which applies only to companies with an investment-grade credit rating, and it has had to go cap in hand to the government to ask for an emergency lifeline of some sort.
Rumours that the government is considering issuing loans that will convert to equity might be a little alarming for those who remember the shambles that was British Leyland, the government’s last dabble in auto manufacturing.
Far more pleasant to recall the heyday of these iconic brands, which after a long period in the doldrums are now both producing high-quality, appealing vehicles.
There may well be structural shifts in the industry if working from home gains permanent traction, but for now the challenge is to get through the next few months.
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