Business

Mark Kleinman: Cenkos chair hit by City breakdown

It was the AA‎, the roadside recovery service, which was responsible for one of the biggest paydays in the history of Cenkos Securities: a £30m fee for orchestrating a management buy-in that led it back to the public markets in 2014.

So its not without irony that Cenkos – a firm which has long-divided City opinion – now faces a serious breakdown of its own.

I can reveal here today that Crystal Amber, the activist fund run by Richard Bernstein and a long-standing Cenkos shareholder, has written to Gerry Aherne, its chairman, effectively demanding that the broker puts itself up for sale.

In the letter, Bernstein complains that Cenkos is "lagging peers in its ability to attract new clients and talent", and that this has fed through to an ambivalence among investors about the company's growth prospects. A formal strategic review is the best way for Cenkoss board to determine how to maximise value for shareholders from the “attractive springboard” it offers to a larger financial institution.

The move exposes a long-running sore for Bernstein: that Cenkos, a cash cow for its senior employees in good years, has delivered comparatively little to loyal investors.

This weeks shocking trading update has enhanced Bernsteins case (although his letter was sent prior to it). Cenkoss shares crashed 12% on Tuesday after it warned that revenues would be materially below last years.

Some volatility is inevitable in the broking business, but this weeks update felt wearily familiar to Crystal Amber and some other shareholders.

A comparison of Cenkos's fortunes to those of larger listed rival Numis Securities does not make pleasant reading for Aherne. Over a one-, three- and five-year period, Cenkos has been comprehensively outperformed in terms of both share price and total shareholder returns.

Cenkos has also found itself with the unwanted distraction of being drawn into governance rows at major clients, including Stobart Group, the infrastructure conglomerate, and Watchstone, the insurance claims processor formerly known as Quindell.

Bernstein is said to feel that Aherne has been insufficiently engaged, citing the meagre shareholding of Cenkoss chief executive, Anthony Hotson, as an example of his detachment.

Let battle commence.

Investors arent revolting

Here's something you don't see too often these days: an under-fire auditor getting an easy ride at a blue-chip company's AGM.

That, though, is what should happen at Vodafone's shareholder gathering later today, when PricewaterhouseCoopers will be re-elected with, I'm told, an overwhelming majority of investor support.

There's been no suggestion that PwC's audit work for the mobile phone giant is sub-standard; the anticipated shareholder rebellion stems from the fact that, as administrator to the defunct retailer Phones 4U‎, it continues to weigh possible legal action against Vodafone.

At last year's AGM, Standard Life Investments accused Vodafone of ignoring a conflict of interest and voted against PwC's re-election, contributing to a 12 per cent mini-rebellion.

And late last year, Vodafone alerted the other big four firms to a prospective switch away from PwC – a move which has yet to materialise.

If today's vote goes as I expect, investors who opposed PwC last year and have maintained their Vodafone shareholdings will be under pressure to explain why they abandoned their earlier opposition. At a time when investors are queuing up to have their say on audit market reform after the collapse of Carillion, their answers will need to be good.

Monzo‎ seeks new chair

Transferwise, Revolut, Oaknorth, Funding Circle: could Monzo be Britains next tech unicorn?

Thats the aspiration of Tom Blomfield, the digital banks founder and chief executive. If it is, it will be achieved with a new chairman, since I understand that Baroness Kingsmill, the Labour peer, is planning to step down after three successful years in the job.

Regulatory oversight means only seasoned bankers need apply.

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CityAM

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