CITY AND SUBURBAN
Itchy directors and institutional sheep, lemmings, and elephants in mangers
CHRISTOPHER FILDES
Directors, so a merchant banker ex- plains, get bored with managing their companies. They've had three undiluted months of it, and that's plenty. They itch for the excitement of the markets — for acquisition strategies, reshaping of busi- ness portfolios, management buyouts and buy-ins and buy-backs, and all the things that keep merchant banks gainfully occu- pied. At the plain vanilla end of the menu, even raising new money by issuing new shares can be fun. We shall see (says the merchant banker) quite a lot of it. As he does not have to say, the big institutional shareholders have asked for it. Six weeks ago they all got the idea that share prices might go up and leave them behind. The result was a buying panic which, before Budget week, took prices up into the wide blue yonder. The Chancellor then moved in to threaten them with £10 billion of Telecom shares and maybe £20 billion of Government stock. Directors of overbor- rowed companies (that is, everyone except Lord Weinstock) now threaten them with plenty more. Suddenly, the institutions' money stops burning holes in their pock- ets. Barclays de Zoete Wedd says that the pension funds' liquidity is at its lowest for three years. You can bet, all the same, that the institutions will use their cartelised power to insist that they are offered 80 per cent of all new issues. They combine the worst qualities of sheep, lemmings and elephants in mangers. The Chancellor, who wants companies to offer their shares in the High Street, will first have to break this cartel.
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