MARKET REPORT: New blow for Goldman Sachs as Petershill shares the tank

The Hermes tie-wearing private equity crowd has had a good decade in their oak-paneled boardrooms, but over the past six months the rot has firmly set in.

Skyrocketing interest rates have made debt more expensive, while raising money in the capital markets has dried up. Few will shed a tear, but the concern is that the fallout will start to hurt ordinary investors, and hard.

There was a rush into private equity as it was on the rise and many piled money into FTSE 250 companies such as Bridgepoint and Goldman Sachs-backed Petershill Partners, giving investors exposure to what is largely considered a closed shop.

The rationale was fair, as fund managers and retail investors were looking for returns in a low interest rate environment and a lackluster FTSE. But performance was dismal.

Bridgepoint, which was spun out of Natwest Equity Partners in 2000 by William Jackson and former 3i (0.4 percent, or 7.5 cents, to 1993.5 cents) man David Shaw, has sold its shares since its 2021 IPO saw 46 percent plummet. But yesterday they grew 1.3 percent, or 2.4 cents, to 191 cents.

Things are even worse for Petershill Partners, which went public the same year. Yesterday the company said revenues for this year would be £168 million, down from its previous forecast of £200 million.

Petershill’s half-year results also fell short of expectations, with profits of £54m, down sharply from £110m a year earlier and almost a third lower than City analysts had expected.

Unlike Bridgepoint, Petershill is not a pure private equity firm, but owns minority stakes in a range of companies including Clearlake and Francisco Partners. It’s also another bloody nose for Goldman Sachs, as Petershill was founded in 2007 by the bank’s asset management division. Goldman still has a 76 percent stake and the banking giant must ask itself what it can do to earn a break as pressure mounts on the bank’s chief executive. chief executive David Solomon, ahead of further job cuts next month.

Petershill shares are languishing 56 per cent below the price of 350 cents at which they floated on the London Stock Exchange in September 2021, falling 14.5 per cent, or 25.4 cents, to 150 cents yesterday.

Elsewhere in the top flight, JD Sports climbed to the top of the rankings after Berenberg said the share price fall this year looked ‘harsh’.

“JD is more than a retailer – it is a global brand that dominates the mindshare of the Generation Z consumer,” the broker said. Shares rose 2.6 percent, or 3.5p, to 137.75p.

Subsequently, the complaint was also filed when Societe Generale gave the company the thumbs up.

Shares in the High Street retailer rose 1.7 per cent, or 116p, to 7108p.

GlaxoSmithKline was another notable gainer, rising 4 percent, or 56p, to 1,444.2p. The pharmaceutical group – led by Dame Emma Walmsley – received a boost after an industry report showed the value of the global vaccine market is expected to reach £74 billion by 2028, up from £45 billion in 2022. Glaxo is the world’s largest vaccine manufacturer .

Overall, the FTSE 100 rose 0.5 percent, or 36.47 points, to 7,478.19. The FTSE 250 gained 0.4 percent, or 79.34 points, to 18463.19.

But there was plenty of red in the final trading session of the week, including Melrose, which had announced a day earlier that top buyers would be pulling back.

The aerospace company’s boss, Simon Peckham, will leave next March after 20 years, while executive vice-chairman Christopher Miller and chief financial officer Geoffrey Martin are also leaving. Shares fell 4.9 percent, or 26.4p, to 510.8p

Ostomy bag maker Convatec was also a loser after its biggest investor, Denmark’s Novo Holdings, said it had given up its seat on the board. Shares fell 2.6 percent, or 6p, to 224.8p.