The week in investor relations: Positive outlook for small caps, Shell to consolidate in the UK and India’s biggest IPO plummets

Nov 19, 2021
This week’s other IR-related stories that we didn’t cover on IRmagazine.com

Small caps are set to perform well in 2022 given their attractive valuations – especially compared with large caps – and strong fundamentals, according to an article by Barron’s. ‘Small caps were cheap relative to large caps before trading sideways for seven months,’ said Keith Lerner, co-chief investment officer at Truist Advisory Services, in the article. ‘They’ve gotten even cheaper, as their forward earnings estimates have risen more strongly than the S&P 500.’

The Wall Street Journal (paywall) reported that Royal Dutch Shell plans to consolidate its dual UK and Dutch structure and relocate its headquarters to London, which it said would help facilitate returns to shareholders and make it simpler to overhaul its portfolio of assets. The company said bringing an end to its complex structure should also make it easier for investors to value the firm at a time when it has committed to transitioning to low-carbon energy. Under its plan, the company’s headquarters will be in the UK rather than The Hague, and its CEO and board meetings will relocate to the UK.

– Ryanair said it will delist from the London Stock Exchange (LSE) due to EU rules on ownership of airlines, reported the Financial Times (paywall). The company has been listed on the LSE for 20 years but EU rules say airlines must be ‘owned and controlled’ by nationals within the EU, Switzerland, Norway, Iceland or Liechtenstein. The change became necessary after the UK left the EU.

– Duke Energy said it would add two directors backed by Elliott Management to its board as part of a deal, after the activist investment firm had pressed the utility company to conduct a strategic review, Reuters reported. Elliott went public earlier this year with demands that Duke split into three companies. In response, Duke said there was no strategic logic to breaking the company apart. It argued such a move would burden each entity with extra costs that would negatively impact services and threaten Duke’s ability to pay its shareholder dividend.

– The share price of India’s largest ever IPO fell sharply on its first trading day, noted the BBC. Paytm, a digital payments platform, saw its stock fall 27 percent after raising $2.5 bn in Mumbai. The company has backers including Ant and Softbank but some investors have ‘voiced concerns about the loss-making Paytm’s business model’, noted the article.

Reuters reported that regulators said banks around the world should put controls over financial risks from climate change at the heart of their board and assess whether their capital buffers could cope with floods, fires and sudden asset price falls. The Basel Committee of regulators from the G20 economies and other countries proposed its first set of principles for dealing with climate-related risks as debate continues over how far and fast regulators should move.

– The WSJ reported that, according to people familiar with the matter, the SEC is investigating claims that Cassava Sciences, the sixth-best performing US stock this year, manipulated research results for its experimental Alzheimer’s drug. Cassava disclosed Monday in a securities filing that it is co-operating with government investigations, without naming any agency. Cassava said an investigation isn’t a sign that wrongdoing occurred. An SEC spokesperson declined to comment.

Reuters reported that Willis Towers Watson, which has been under pressure from activist investor Elliott Management, appointed four new directors. Inga Beale, the former CEO of Lloyd’s of London, is one of the newly appointed directors, the insurance broker said, adding that Fumbi Chima, Michael Hammond and Michelle Swanback are also joining the board. Willis further announced that board chair Victor Ganzi would not stand for re-election at the company’s AGM in 2022 after his current term expires.

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