Ocado faces relegation to the FTSE 100 after a fall in its share price. This has increased pressure for the company, which is now considering moving from London to New York.
London Stock Exchange has said that the company is likely to be removed from the blue-chip index after its value plummeted during the pandemic, going from £22bn to only £3.6bn on Tuesday.
St James’s Place’s share price has fallen more than 55% in the last year due to an overcharging scandal.
In the first quarter of this year, the UK’s biggest wealth manager saw £3bn in customer withdrawals after it revealed in February that it had put aside £426m to cover potential refunds of clients who had been overcharged for services they hadn’t received.
Darktrace, a technology company, and Vistry Group, a housebuilder and developer of houses will replace Ocado and St James’s Place. These are only indicative decisions, and the final decision will be made using market data from June 4.
Ocado’s shares must rise by nearly 22pc between now and the 4th of June, from 411p up to 500p, to surpass Darktrace’s £4.1bn valuation.
Ocado shares jumped nearly 10pc Tuesday despite concerns about its relegation.
Ocado, which was first listed in 2018, held discussions with investors in which the idea of moving its listing to the US came up. It was revealed in the last month.
Sources at the time said that a similar move would ease executive frustrations about how Ocado was viewed in London.
Tim Steiner, the chief executive of Ocado and its founder, has been trying to convince investors that it is a technology firm rather than an online grocery store with a negative profit margin. Marks & Spencer and Ocado Retail, its online grocery service, signed a joint-venture agreement in 2019.
In recent years, however, the difficulties of making this business profitable has weighed down on Ocado Group’s share price. M&S and Mr Steiner have both expressed disappointment with the performance by the online grocery retailer.
Tensions between the two partners have been increasing despite recent signs of improvement.
Ocado had threatened to sue M&S in February over a payment of millions of pounds for the venture. M&S says Ocado shouldn’t receive the final payment of £191m because the venture failed to meet performance targets. Ocado claims that the failure to meet the goals was due to decisions made during the pandemic, which should have been taken into consideration. The final payment is still being discussed.
Ocado refused to comment on the FTSE reshuffle.
The speculation over its future is a result of a number of departures on the London market. This has fuelled concerns that London struggles to maintain its position as a global financial hub.
Paddy Power’s owner Flutter is among a number of major companies that have turned their backs to the City. Others include the plumbing giant Ferguson, the cement maker CRH, and the tour operator Tui.
Trading platform XTB discovered that the number companies listed on the Square Mile had dropped by over a quarter during the past 10 years.
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