Pascal wagered God existed because fruitless belief was a better downside risk than damnation. By the same logic, bankers in the City and on Wall Street believe Saudi Arabia will float the Aramco oil group at a mooted worth as high as $2tn. Whatever their private doubts, they know they must behave as if the deal is on to merit a place aboard any golden syndicate.
Credible accounts from Aramco would bolster their faith. Three-year numbers would therefore be among the most hotly-anticipated pro-forma accounts in history. They should show how far the desert kingdom, not noted for its willingness to accommodate outsiders, is prepared to go to meet the expectations of foreign investors.
The numbers would need to do three things. First, they should feature a credible bottom line. Aramco’s operating costs are thought to be high. Some 93 per cent of profits are said to disappear in social charges. Second, an audited reserves estimate is required. The doctrinally-accepted figure in the oil industry is 263bn barrels.
The first two elements would determine valuation. The third, an outline of divisional structure, could independently supply a lever to make a transaction more manageable.
Bankers hope reforming Saudi royal Mohammed bin Salman can be persuaded to spin off downstream businesses such as refining and petrochemicals instead of floating the whole of Aramco. This would be politically easier and create less danger of indigestion on the markets. Even at a $250bn-$400bn valuation of Aramco from Gulf energy consultancy Qamar, a targeted 5 per cent free float would require a placing of some $16bn.
Financiers know they are dealing here with princes, not biddable industrialists from Akron or Aberdeen. Wise courtiers do not instruct or suggest. They drop hints. Publication of Aramco accounts would give them an opportunity to do so.
Misys founder and erstwhile chief executive Kevin Lomax was keen on shooting. Critical stock analysts transfixed by his basilisk stare rather feared he’d like to shoot them. Instead, he stepped down in 2006. Misys was taken private in 2012. Four years on, the software group is coming back to the market under cheerier management.
If bonhomie was the determinant, current chief executive and ex-Oracle guy Nadeem Syed would have no problem achieving the 24 times earnings implied by a mooted enterprise value of £5.5bn. However, memories of Misys’s jam-tomorrow incarnation during the Lomax era inspire scepticism.
Back then, the company was a mini-conglomerate, awkwardly spanning banking software, healthcare systems and compliance for financial advisers. Misys 2.0 is larger, due to acquisitions, and more focused. Banking software is now its sole stock in trade.
Investors had better hope the business is now proof against the cyclical ebbs and flows that caused the division to regularly undershoot forecasts in the past. A tale of secular growth may be spun from banks’ supposed need to cut costs by buying in systems rather than developing them.
The implied valuation is in line with rivals such as Temenos and Fidessa. But a discount may be required to compensate for a lack of recent track record as a quoted group and to appease investors with long memories.
Twannng! Last week David Richards was ousted as chief executive of software company WANdisco. Boinnng! On Thursday, Daredevil Dave bungeed back into the building, ricocheting chairman Paul Walker out through the loading bay. The cockney phrase “well, I’ve never seen the like” springs to mind. We are used to incoming bosses who bounce off the plate glass, like Simon Nicholls, dumped as finance director of Wolseley before he even started. Similarly, founders sometimes return to rescue companies, as Steve Jobs did at Apple.
What’s unusual here is that Mr Richards returned so fast and with such devastating effect for Mr Walker. The respected ex-chief executive of Sage and fellow director Ian Duncan had come to the same conclusion impartial observers reached years ago: WANdisco was burning too much cash and remained too far from break even.
The pair decided to remove Mr Richards, co-founder of the Aim-quoted database software specialist, after an unsatisfactory board meeting. But they failed to secure the support of enough investors. A revolt led by a small US hedge fund snowballed to include Oppenheimer and Schroders. With the support of 58pc of shareholders, Mr Richards, like the Terminator, came back.
Here’s the lesson for anyone planning a palace coup. By all means determine the best window to heave the king from and square the palace guard. But unless you win the support of the mob - sorry Oppenheimer, sorry Schroders - your head may end up adorning a spike.
