Alaska Fund Backs Browne Stock Market Return

By Mark Kleinman, City Editor

Alaska's sovereign wealth fund is to plough hundreds of millions of pounds into a new oil investment vehicle that will provide the platform for a return to the London stock market for Lord Browne, the former BP chief.

Sky News has learnt that the Alaska Permanent Fund Corporation , which invests on behalf of the state's citizens, has signed up as a cornerstone investor in Riverstone Holdings, a listed holding company that will invest in renewable energy assets around the world.

People familiar with the deal say the Alaskan fund is likely to invest between £135m and £250m in return for a stake of up to 27% in the vehicle.

Among the other cornerstone investors will be the family office of Louis Bacon, a prominent hedge fund billionaire, and Hunt Oil, a group headed by Ray L Hunt, a Texan oil tycoon.

The listing is expected to be launched on September 23 and could see Riverstone Holdings raise between £500m and £1bn, according to bankers.

It will invest in companies across the oil and gas and renewable energy sectors that mirror deals struck by the Riverstone private equity firm, which completed a $7.7bn (£5bn) fundraising in June.

The appointment of Lord Browne to the board will mark the latest stage of a comeback for the former BP chief executive, whose other roles include the chairmanship of Cuadrilla Resources, the privately-owned fracking company which is facing opposition to its efforts to extract gas in parts of the UK.

He also oversaw the recent purchase by Riverstone of oil and gas fields off the southern coast of the US, where his successor at BP, Tony Hayward, was plunged into crisis during the 2010 Gulf of Mexico oil spill.

The new Riverstone Energy vehicle will be chaired by Sir Robert Wilson, the former chairman of BG Group.

The listing of a so-called permanent capital vehicle in London will provide Riverstone with a potentially open-ended supply of funding to conclude deals as investors pour money into opportunities triggered by the US shale oil and gas boom.

The board contains a number of directors with links to Goldman Sachs, which alongside JP Morgan is preparing the Riverstone Energy flotation, as well as Mr Bacon, whose hedge fund Moore Capital is one of the largest on Wall Street.

The former chief executive of Anadarko Petroleum, James Hackett, and Tidu Maini, the chairman of Qatar Science and Technology Park and a former director of Schlumberger, are also joining the Riverstone Energy board, raising the prospect of Qatari funds becoming a significant investor.

Riverstone and Lord Browne could not be reached for comment.

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Royal Mail Sale: Thursday Delivery Target

Some of the City's most prominent fund managers are lining up to back the £3bn privatisation of Royal Mail as ministers target Thursday morning to press the button on the historic sell-off.

Sky News understands that Lansdowne Partners and Standard Life Investments are among the City institutions which have provided positive indications of their appetite to invest in the company despite the looming threat of the first national strike by Royal Mail staff since 2009.

The pair is among scores of prospective investors with which the postal operator's executives and advisers have held discussions in recent months as the Government attempted to build enthusiasm for the initial public offering.

Investment bankers involved in the deal say they are surprised at the extent of the positive reaction to their initial soundings with investors, although the actual demand for shares will depend to a large extent on how they are priced.

Ministers are likely to take a final decision on Wednesday evening to press ahead with the privatisation, which will take place through a stock market flotation in London next month. A statement formally known as an Intention To Float announcement is expected at 7am on Thursday.

A spokeswoman for the Department of Business, Innovation and Skills insisted on Monday that no final decision had been taken about the timing of a deal. Other external factors such as the crisis in Syria and an impending announcement about the sale of part of the Government's stake in Lloyds Banking Group could yet alter the Royal Mail timetable, insiders said.

Strikes could be a major obstacle to privatisation plans

However, ministers have made it clear that they will not allow the Royal Mail privatisation to be distracted by the robust stance of trade unions.

Sky News revealed last week that Royal Mail would commit to a generous dividend policy in order to entice investors to back the flotation, with a commitment to a specific shareholder payout for the current financial year, as well as a general intention to distribute up to about 50% of its profits in the form of dividends in subsequent years.

"This will be an income stock for investors despite the continuing decline in the company's core letters business," said one person close to the group.

Royal Mail's board is understood to have backed the dividend pledge in principle and will meet on Wednesday to agree further details relating to the privatisation.

Postal operators in other European markets tend to pay out at least 40% of their earnings in dividends although Royal Mail would be expected to retain a large chunk of its future profits as it continues to invest in the modernisation of the company.

The company's flotation will include an eventual distribution of 10% of Royal Mail shares to 150,000 of its employees and an offer of shares to ordinary retail investors.

Royal Mail declined to comment on Monday.

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Osborne: Economy Showing Signs Of Recovery

UK Economy Lacks Feel-Good Factor

Updated: 6:43pm UK, Monday 09 September 2013

Here's something to dwell on: back in 2010, at the time of George Osborne's first budget, the Government was predicting that by this stage, midway through 2013, the economy would be almost 3% bigger than it was at the start of the economic crisis.

Instead, today Britain's economy is still over 3 percentage points smaller than it was before the crisis.

If you compare the shortfall to trend growth (in other words what Britons should have been earning were it not for the crisis at all) the gulf is almost 20%.

The statistics help explain why now even the chancellor is referring to what's happened over the past few years as "The Great Recession".

All that lost output means that Britain is considerably poorer than it was even a few years ago - after all, remember that GDP is merely a measure of the total amount everyone in the country is earning.

This is important: it means that although Britain may well be "turning the corner", as Mr Osborne said today, it may take some time before the feel-good factor returns.

It's worth remembering this when considering the chancellor's economic strategy.

For the first time in years, the economy seems to be showing some genuine signs of growth.

The purchasing managers' indices suggest economic output is running at the strongest rate since the late 1990s.

All being well, that should equate to very punchy growth in the GDP figures when the Office for National Statistics publishes them.

Moreover, unemployment looks like it may be on the way down.

This is all good news: however, none of the above is likely to put much of a smile on peoples' faces.

It will not make Britons feel richer - particularly when you consider that real incomes are currently at around the same level they were back in 2003.

That, I suspect is one of the reasons why the chancellor remains very wary of declaring the end of the misery.

"Turning the corner", as Mr Osborne called it today, is very different to the full, lusty "green shoots" of recovery Norman Lamont talked about in the early 90s.

However, there is one way a chancellor can give people the impression of being wealthy - even when they remain poorer than they were some years ago.

You boost house prices. It is hard to escape the conclusion that that is the objective of the chancellor's Help to Buy scheme.

It is an economic illusion, of course: you can't realise the extra value of your home unless you downsize or move to another country.

But higher home prices might at least detract from the fact that actual real incomes are still so much lower than they were before the crisis.

There may not have been any new economic policy in today's speech, but it is nonetheless an important one. From hereon his language will be the language of recovery.

The question that still remains is whether he can generate a recovery that has a feel-good factor about it.

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Empty Retail Space Filled By Leisure Companies

Cafes, restaurants and betting shops have sprung up to fill some of the retail space left vacant by the effects of recession and the consumer spending squeeze.

The report by the Local Data Company (LDC) reveals an improving picture for high streets amid retail park decline.

The overall store vacancy rate fell to 14.1% from 14.2% - measured in February.

High street vacancies in large centres fell to 13.5% from 16.2% last year, while they were down to 11.9% in medium centres (from 15%) and 9.2% in small centres (from 10.6%).

But these improvements, the LDC said, were offset by an increase of empty units in retail parks - hit by high-profile failures such as Comet - from 8.1% to 9.6%.

Mary Portas has tried to breathe new life into high streets

Shopping centres remained the most-plagued by unused sites, improving only slightly from 16.2% to 16.1%.

The report also highlighted a regional divide, illustrated the LDC said, by the fact that 21 of the 25 worst areas were in the North, Midlands or Wales.

In the North West, one in five shops (20.1%) was vacant, twice the rate in London (9.4%), it found.

West End in Morecambe, Lancashire, had the highest rate of vacancies at 37.1%, while Rickmansworth, Hertfordshire, had the lowest with just 1% of shops empty.

Margate in Kent, chosen as a pilot for retail guru Mary Portas's proposals to boost the high street, had the third highest rate, at 30.8%.

LDC director Matthew Hopkinson said of the report: "Restaurants, bars, cafes and even betting shops have come to the rescue as the growth of leisure takes off in our town centres.

"This report clearly shows that whilst the rise of empty shops has stalled it still remains stubbornly high for many towns up and down the country."

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Jaguar Land Rover To Create 1,700 New Jobs

China's Love Affair With JLR

Updated: 11:27am UK, Tuesday 10 September 2013

By Mark Stone, China Correspondent in Beijing

It's not possible to drive for more than about two minutes in central Beijing without seeing a Land Rover of some sort.

They are everywhere: the Range Rover, the Range Rover Sport, the Evoque, the Discovery and the Freelander.

Every car the company has to offer has sold staggeringly well across China.

The latest offering - the British-built Range Rover Evoque - seems to have sold better than anything.

Over the past few weeks I have counted scores of them.

As I write this, from the passenger seat of our car (not a Range Rover sadly!) four sparkly new Evoques have driven past.

According to figures published by Jaguar Land Rover, vehicles sales in China last year were up 74% on the previous year.

In 2012, the company sold 73,347 cars in China. Of them, 65,896 were Land Rovers. The rest were Jaguars.

In December alone, more than 8,200 vehicles were shifted from Chinese forecourts.

"Since we established our National Sales Company in China ... (the country) has already become our largest market worldwide, thanks to the market's positive reception of our products," said Bob Grace, president of Jaguar Land Rover China.

The success in China is all the more remarkable given that they cost so much more here.

After import tax is paid, a Range Rover Evoque will cost about RMB630,000 which is almost exactly £65,000.

In the UK, you would pay £39,000 for exactly the same car.

China now has an eye-watering number of very wealthy people. They have a love affair with luxury and even better if it's British.

No wonder the company has just announced a £1.5bn investment and 1,700 new jobs.

The company may now be Indian-owned, but its remarkable success in China is great news for the UK and a testament to British engineering.

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Top City Investor Warns FTSE Bosses On Pay

By Mark Kleinman, City Editor

Public companies which fail to explain the performance measures behind bonus targets for top executives will risk the biggest investor in London's stock market voting against their pay policies, it has warned.

The edict was contained in a letter sent by corporate governance chiefs at Legal & General Investment Management (LGIM), which owns roughly 3% of the FTSE-100 index, giving it a powerful voice in corporate boardrooms.

LGIM wrote to the chairs of the remuneration committees of all FTSE-100 companies late last month as a prelude to the introduction of new rules that will involve giving investors a binding vote on future pay policies.

According to the letter, a copy of which has been leaked to Sky News, LGIM wants blue-chip companies to go further in demonstrating restraint following a period in which dozens of major corporate names have suffered embarrassing revolts over lavish executive payouts.

The series of rows prompted Vince Cable, the Business Secretary, to pave the way for a toughened new pay regime that comes into force on October 1, which includes binding votes for company investors.

LGIM's letter said that companies should not attempt to hide behind "commercial sensitivity" as a reason for failing to disclose granular details about performance targets, the investor said.

"Where companies believe that there is a genuine reason why some of these historic targets may continue to be commercially sensitive, we would require a full explanation as to why it is considered sensitive and for how long it will remain so.

"LGIM will consider a vote against a company that considers all of their performance measures to be commercially sensitive for an indefinite period."

LGIM said new chief executives of Britain's biggest public companies should be obliged to put their own money at risk by acquiring shares in their businesses.

Owned by the insurance group Legal & General, LGIM also said that companies should refrain from making significant 'golden hello' payments.

Citing recent examples at Bellway, the housebuilder, and Diageo, the drinks company, boards should phase in pay rises for newly-promoted directors over two years to take account of experience in the new role.

"When recruiting an external candidate, companies should take into consideration the experience of the individual and not just at the incumbent's salary. The present circumstances of the company should also be taken into consideration," the letter said.

LGIM also questioned the value of clawback provisions as a tool for reclaiming the pay of executives subsequently shown to have presided over periods of poor corporate performance.

"This has been widely adopted but the actual practice of exercising clawback can be difficult and costly.

"We would, therefore, like you to consider introducing malus [an alternative means of withholding pay], which is easier to apply and allows the remuneration committee to apply judgement to reduce outstanding and/or deferred awards."

The chairman of one FTSE-100 remuneration committee called LGIM's letter "a valuable contribution" to the pay debate and said it would help to frame remuneration policy more appropriately in UK boardrooms.

The City investor's decision to write to all FTSE-100 companies is a relatively unusual step for LGIM and illustrates the greater engagement on pay and governance issues being demonstrated by fund managers.

LGIM said it was "a long-term supportive shareholder", pointing out that it had opposed some of the more Draconian proposals originally considered by the Government, such as requiring exit payments to be subject to binding votes or having company employees on remuneration committees.

LGIM voted against scores of remuneration reports during the so-called 'shareholder spring' of 2012, which was one of the factors attributed to greater compromise from listed companies - and fewer revolts - this year.

The investor declined to comment further on the letter.

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Ed Miliband Stands By His Union Reforms

Ed Miliband has warned union leaders they must have the "courage to change" as he rejected criticism of his controversial reforms.

The Labour leader told the TUC Congress he is "absolutely determined" to drive through the plans to overhaul his party's union links.

Union leaders are furious at the plans, accusing the Labour leader - who was elected to the top job on the back of their votes - of living in "cloud cuckoo land".

MPs have also warned Labour faces financial meltdown because of the changes, which have already prompted the GMB union to slash its funding by more than £1m.

Mr Miliband, in a speech made without notes, admitted ending the automatic affiliation of union members to Labour would be a "massive challenge".

But he told delegates in Bournemouth, who included some of his toughest union critics, that sticking with the current system was a "bigger risk".

Ed Miliband reading through his speech on the train to Bournemouth

Mr Miliband claimed party membership could soar to 500,000 or more if his plans are embraced by union chiefs, making Labour a "genuine living, breathing movement".

"It will be a massive challenge for the Labour Party to reach out to your members in a way that we have not done for many years and persuade them to be part of what we do," he said.

"And like anything that is hard, it is a risk. But the bigger risk is just saying let's do it as we have always done it ...

"We have to have the courage to change ... It is the right thing to do ... and I am absolutely determined this change will happen."

In an attempt to mollify union chiefs, Mr Miliband also gave a robust defence of trade unionism as he accused David Cameron of ignoring ordinary workers.

He used the word "friends" at least three times in the address and hailed union members as "the backbone of Britain".

The leader claimed the Tories only looked out for the rich and vowed to build an economy for working people if he wins power in 2015.

His pledge to ban zero-hours contracts was the most warmly received part of the address, which otherwise only generated polite applause in the hall.

He also outlined plans to help young people out of unemployment with a greater focus on apprenticeships, and for a new British investment bank to fund small businesses.

But during a follow-up Q&A session, a delegate who accused him of giving "contradictory" messages on the economy was applauded for speaking out.

Janice Godrich, from the PCS union, said: "Ed Balls says this is the wrong sort of recovery but you are also fundamentally committed to the Tories' spending plans.

"You say the next election will be about living standards but you are committed to extending the pay cap.

"Your policies seem contradictory and they are confusing people. Can we get a clear answer: are you for or against austerity?"

Mr Miliband said he was "absolutely clear" that the party was anti-austerity but warned Labour would face tough choices if it regained power and had to be "credible".

Unite boss Len McCluskey expressed his support after the address, hailing Mr Miliband for looking like a "real leader" and laying down lots of "flags" for the future.

He said he was "beginning to seal the deal" with workers, adding: "We look forward to getting more meat on the bone in the coming months."

Unison's general secretary Dave Prentis also welcomed the measures on the economy but warned talking about reforming union ties was a "turn-off".

"He talks about having the 'courage to change' but I was always told if something ain't broke, why fix it?," he said.

Bob Crow, leader of the Rail Maritime and Transport union, called the speech a "wasted opportunity" and claimed Mr Miliband looked "like a terrified rabbit caught in the glare of of the Tory headlights."

The party leader unveiled proposals to change Labour's relationship with the unions after allegations of ballot-fixing by Unite in Falkirk surfaced earlier this year.

There was immediate concern about how this would affect party coffers and last week the GMB and Unison both cut their funding.

The row intensified over the weekend after an internal Labour investigation cleared Unite and its preferred candidate of any wrongdoing in the Scottish selection race.

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Dyson Sues Samsung Over 'Patent Infringement'

Dyson's founder has angrily rounded on rival Samsung, accusing the South Korean firm of 'ripping off' a steering mechanism design for vacuum cleaners.

SIr James Dyson was speaking after the company confirmed it had filed a claim at the High Court as it believed the Samsung Motion Sync vacuum cleaner infringed its patent for an invention entitled "A cleaning appliance with a steering mechanism".

Samsung described the legal action as "groundless".

Dyson said its case revolved the world's first cylinder vacuums with Ball technology which have a patented central steering system "to give stable manoeuvring around tight turns, table legs and sofas."

Dyson claims Samsung has copied its technology

The firm explained that more than 110 components were housed within the ball.

In his statement, Sir James said: "This looks like a cynical rip off by the giant Korean company Samsung.

"Although they are copying Dyson's patented technology, their machine is not the same.

"Samsung has many patent lawyers so I find it hard not to believe that this is a deliberate or utterly reckless infringement of our patent.

"We have been forced to issue proceedings in the English High Court, but I would much rather invest in research to develop new technology than have to sue".

Samsung launched the Motion Sync cleaner in Europe at the IFA electronics fair in Berlin last week.

Its statement read: "The Samsung Motion Sync is an outcome of our own extensive research and development.

"We will take all necessary measures, including legal actions, to protect our technological innovation against Dyson's groundless claims."

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Apple Expected To Launch New iPhones At Event

Apple Launch Could Open New Market

Updated: 3:41pm UK, Tuesday 10 September 2013

By Mark Stone, China Correspondent, in Beijing

In China, Apple has two problems: price and reach.

Let's take 'reach' first. In China there are three mobile phone networks: China Unicom, China Mobile and China Telecom Corporation.

To date, Apple has only managed to establish a deal with two of them: China Unicom and China Telecom Corporation.

Given that the other carrier, China Mobile, is the world's largest network with an estimated 745 million subscribers, Apple is missing out on a huge chunk of the Chinese consumer base.

To put it simply, 745 million people are, at the moment, unable to buy an iPhone because it's not available on their network.

There have been plenty of rumours about a deal finally being signed between Apple and China Mobile. It hasn't happened yet.

The second problem for Apple in China is price. The iPhone is significantly more expensive than every other smartphone available on the Chinese market and there are many to choose from, Samsung being the biggest. 

Sales of Android phones are far outstripping the sale of Apple's iPhone, making up about 90% of the Chinese market.

This is partly down to the fact that most Android phones are available on all three of the Chinese networks but it's also because they are cheaper.

Apple's share price has fallen from $700 (£446) a year ago to about $500 (£319). The problems in China are thought to be largely to blame.

A deal with China Mobile will help considerably. But a cheaper handset seems vital too.

That's where the conveniently named iPhone 5C comes in. It's not clear if the 'C' stands for 'China' (or perhaps 'cheap') but there's no doubt that it's aimed at the Chinese market.

Rumours suggest it will be plastic and available in multiple colours. That will certainly appeal to the young and upwardly mobile Chinese consumer who seems to buy increasingly gaudy phone covers.

The balance for Apple is tricky though. It likes to be seen as a premium brand - a cut above the rest perhaps.

Introducing a cheaper phone may well diminish that brand but to crack the Chinese market properly, that might be a price worth paying.

There is a strange irony here though. iPhones may be proudly "Designed in California" but they are "Made in China" to keep costs down.

Now the company finds itself having to produce a cut-price model to win over the very people who make the phones.

The Chinese, after all, seem to be the key to its future.

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Bank Consults On Scrapping Paper Money

The Bank of England has launched a consultation about replacing Britain's paper banknotes with new polymer varieties.

It would be the first time in the 300-year history of official UK banknotes that they would be made of a material other than paper.

The bank also intends to make the new banknotes around 15% smaller than the current versions.

The polymer £5 note would be smaller than the current one

"Polymer banknotes are cleaner, more secure and durable than paper notes," the bank's deputy governor Charlie Bean said.

"They are also cheaper and more environmentally friendly.

"However the Bank of England would print notes on polymer only if we were persuaded that the public would continue to have confidence in, and be comfortable with, our notes."

Mark Carney oversaw the introduction of polymer notes in his native Canada

The consultation itself will last until November and the decision on whether to introduce them will be made in December.

Polymer notes have been in use in Australia for 25 years, and were recently been introduced in Canada, under the governorship of Mark Carney.

The Bank of England said it had been researching polymer banknotes for three years, but the final decision to launch the consultation was made by Mr Carney, who is now Bank of England Governor.

Polymer notes would potentially be introduced for the new £5 note, which will feature Winston Churchill, and the new £10, which will feature Jane Austen, in 2016 and 2017 respectively.

Although the polymer notes cost around 50% more to produce than existing paper notes ("a few pence each" according to chief cashier Chris Salmon) they also last longer - between two-and-a-half and six times.

Current £5 notes have a life of around two years.

The bank said it hoped the new notes, which are harder to counterfeit, would reduce banknote forgery in the UK, which is at higher levels than many other countries.

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