Companies in the news ... and how they were assessed

Asos: out of fashion

The online fast fashion giant Asos began the year triumphantly “scooping up the remains of Philip Green’s empire”, said Nils Pratley in The Guardian. It has been downhill ever since. This week, the group (founded in 2000 and focused on twentysomethings) warned that profits next year could be more than a third lower than expected – prompting a share price tumble of 13%, and the immediate exit of CEO Nick Beighton (pictured). Asos’s market value has now halved to £2.4bn since the start of the year. There’s “something familiar in this story for long-term Asos watchers”: every time the share price hits £60 it halves within 12 months. It seems “the curse has struck again”. “Sudden departures unnerve investors when detail is absent,” said Lex in the FT, particularly in the midst of an global growth drive. Whoever takes over from Beighton should add “a flak jacket” to their “wardrobe essentials”. Asos blames “supply-chain hell”, said Alex Brummer in the Daily Mail. “There must be some sympathy for that”, but it’s far from the whole story. Asos has allowed “financial ambition” to “run far ahead of market changes” – with “cataclysmic” results. “Watching all this from Monaco, Philip Green could be forgiven a wry smile.”

GFG Alliance/Liberty Steel: Gupta buys time

The director general of UK Steel, Gareth Stace, has warned that “the energy crisis” is rapidly “becoming a steel crisis”, said Henry Zeffman in The Times. With fuel prices now five times higher than average costs last year, “it’s not a matter of making it through the next few months”, he said. “It is a matter of making it through the next few weeks.” Still, at least Sanjeev Gupta is back in the game, said Simon Foy in The Daily Telegraph. After agreeing a crucial debt restructuring, the metals tycoon at the centre of the Greensill Capital scandal is seeking “to relaunch production” at Liberty Steel’s Rotherham and Stocksbridge plants with a £50m injection into the struggling operations. Gupta has been “racing to find new funding” for his GFG Alliance global empire ever since Greensill, his main lender, collapsed in March, said Sylvia Pfeifer in the FT. The UK funding was made possible by a restructuring of GFG’s Australian assets, providing “some much-needed breathing space for Gupta”, whose group still has more than $5bn in outstanding debt. Among his other “challenges” is a Serious Fraud Office investigation. The deal ends “months of uncertainty” for some 3,000 Yorkshire steelworkers. Given the perilous predicament of the wider UK industry, however, the celebrations may be muted.

KKR: barbarians exit

It’s the end of an era at “the seminal” Wall Street private equity firm KKR, said Miriam Gottfried in The Wall Street Journal: 45 years after starting the buyout giant, cousins Henry Kravis, 77, and George Roberts, 78, are stepping down as co-CEOs. They’ll be replaced by two younger men: Joe Bae and Scott Nuttall. Although not the first to deploy what later became known as “a leveraged buyout”, Kravis and Roberts are “widely credited for popularising the format”. After their partner, Jerome Kohlberg, left the firm in 1987, they embarked “on a string of deals” including the landmark $25bn hostile takeover of the snack and tobacco giant RJR Nabisco in 1988, which inspired the bestselling book Barbarians at the Gate. The deal was hugely contentious: Time magazine observed that “seldom since the robber barons of the 19th century has corporate behaviour been so open to question”. But it was a crucial staging post in private equity’s evolution “from a cottage industry in the 1960s into a global investment force”, said Louisa Clarence-Smith in The Times. KKR now has around $429bn of assets under management across numerous business lines. Although later eclipsed by rival Blackstone, it remains one of the most formidable financial enterprises Wall Street has ever produced.

Burger King: whopper of a float?

There’s a tasty financial treat in store for fans of the Whopper, said Sabah Meddings in The Sunday Times. Burger King UK is cooking up plans for a London float. Burger King, which has been owned by the private equity group Bridgepoint since 2017, is expected to be valued at between £500m and £600m if it makes it to market, though an auction sale is also being considered. The time looks ripe, said Hannah Boland in The Daily Telegraph. Buoyed by a jump in deliveries, Burger King sales have “sizzled” in the Covid era. A float would come amid “a wave of other restaurant debuts”: Mexican food chain Tortilla debuted in London last week and TGI Fridays will list later this year. These pandemic survivors are out “to capitalise” on “reduced competition for customers”.