Soames to leave Serco and IPO revival spurred by two new trusts

“Disappointing UK GDP figures failed to derail the country’s main stock indices, with the domestically focused FTSE 250 up 0.3% and the more international FTSE 100 rising by 0.6%,” says Russ Mould, investment director at AJ Bell.

“The mere 0.2% advance in the UK economy in July would suggest consumers have been tightening their belts as they continue to feel the pain from rising inflation. With US inflation figures out tomorrow and the UK’s next numbers coming on Wednesday, investors could be facing some grim news this week if the cost of living keeps going up, which may serve to destabilise equity markets.

“Tech stocks and tech-heavy private equity investment trusts were in vogue again, having started to move higher last week.”

Serco

“Serco shareholders were disappointed that Rupert Soames is to retire as chief executive next year, which will conclude nine years with the company. Soames is widely credited as reviving Serco’s fortunes. He restored the outsourcing group’s credibility after the electronic tagging scandal where Serco took responsibility for three offences of fraud and two of false accounting between 2010 and 2013.

“Soames, the grandson of Sir Winston Churchill, took on one of the largest turnaround stories on the market and has since put the business back on the right path. While the share price may still only be a fraction of its pre-tagging scandal days, the business has returned to notably better health. Its reputation has improved, debt is forecast to come down and profit is expected to go up, which means Soames can exit knowing he has made a difference.”

Investment Trusts – Independent Living REIT/Sustainable Farmland Trust

“Might we be seeing the early signs of a revival in IPOs? After a dearth of new market entrants in recent months, there is now news of two specialist investment trusts hoping to join the London market, including Independent Living REIT in the property space.

“The war in Ukraine has pushed up food prices around the world, so investors have been eager to find ways to play this trend. Fertiliser and agricultural equipment companies have been natural places for investors to look, with farmers under pressure to increase crop yields. The next logical place is to look at agricultural land as an investment, and that’s the premise behind The Sustainable Farmland Trust which is hoping to raise £200 million to invest in US land.

“This may seem a vibrant space in the current environment, yet the agricultural industry can be widely unpredictable. Climate change could bring about more severe weather with either drought or excessive rain damaging crop production which, in turn, would threaten the ability of the farmers to pay their rent.”

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