Finance companies face drop from FTSE 100

TWO financial companies, insurance-focused takeover vehicle Resolution and the London Stock Exchange look set for demotion from the FTSE 100 share index at the next quarterly index review.
By The Newsroom
Published 9th Mar 2010, 11:31 BST
Updated 9th Mar 2010, 11:31 BST

At the market close on Friday, Resolution and the LSE were both below 111th position in the FTSE indexes calculations, which are based on market capitalisation.

Mid-cap pest control-to-parcel deliveries firm Rentokil Initial, and South African-based financial services group Investec, were in pole position to move up to the blue chip index, both being above the 90th place based on Friday's close.

Hide Ad
Hide Ad

Companies outside the FTSE 100 that grow to rank among the 90 largest by market capitalisation are automatically promoted into the blue chip index, while the FTSE 100 firms with the lowest value or that fall to 111th spot or below, drop into the FTSE Midcap 250 index.

Resolution's share price has fallen by about 20 per cent since the beginning of the year having first been offered to investors at 100p in a December 2008 flotation that raised 600m.

The company, which aims to buy and merge at least three life insurers or asset managers before selling or listing the enlarged group in 2012, has so far completed just one deal, last year's 1.8bn purchase of insurer Friends Provident, although a number of potential takeovers have been mooted.

LSE shares are just 1.5 per cent below their level at the start of the year but have underperformed a near 3.5 per cent rise in the FTSE 100 index, with tough market conditions and heightened competition affecting the firm.

Hide Ad
Hide Ad

LSE unveiled a 9 per cent fall in third-quarter revenue with its last trading update at the end of January and since then it has joined forces with banks operating alternative trading platform, Turquoise in a bid to stave off competition.

In contrast Rentokil Initial's shares, which were only demoted from the blue chip index in the last reshuffle in December, have risen more than 15 per cent in the year to date.

The support services firm's stock got a strong boost in the middle of February when it posted a better than expected 54 per cent jump in 2009 pre-tax profit as chief executive Alan Brown's cost-focused turnaround strategy delivered.

The review uses the closing prices from Tuesday, but the changes have to be confirmed by a FTSE committee on Wednesday.

The index changes will be implemented from the start of business on Monday, March 22.