TheChek News Flow

Neo Energy has warned it will slow UK investments, blaming ‘fiscal and regulatory uncertainty’

Business lobbyists cry wolf all the time — especially if governments threaten to push up their costs or taxes. The oil and gas industry has been guilty of frequent hyperbole and exaggeration. But when it comes to the UK North Sea, for once their warnings aren’t all bluff.

The normally tight-lipped North Sea oil producer Neo Energy warned this week that it would slow UK investments, blaming “fiscal and regulatory uncertainty”. The development of its Buchan Horst oil project, 115km north-east of the Aberdeenshire coast, will be delayed while it awaits “clarity” on the UK’s tax position in October’s Budget. Neo, owned by Norwegian private equity group HitecVision, had targeted first oil in late 2027 from the £1bn scheme.

There are several issues. First, the new Labour government confirmed in July it would add 3 percentage points to the UK’s energy profits levy. The EPL is an additional tax on the UK industry introduced in 2022, after Russia’s invasion of Ukraine triggered a surge in energy prices. The latest change will take the cumulative tax rate up to 78 per cent.

More significantly, Sir Keir Starmer’s government is making changes to the investment and capital allowances. Introduced by previous administrations, these were designed to ensure that, even as taxes rose, companies would still invest in production. 

Some of these allowances looked overly generous: from 2022 for every £100 companies invested in new projects they could receive tax relief of about £91. This autumn, the industry expects tax relief to revert to pre-2022 levels of 46 per cent. The difference is that in 2021, profits were taxed at only 40 per cent. Sharp cuts to capex seem a pretty obvious consequence: lobby group Offshore Energies UK estimates nearly £12bn of capital investment is at risk between 2025 and 2029.

Fears that the North Sea is moving into run-off mode has left valuations for oil and gas specialists there in the doldrums. Serica Energy, which has a 30 per cent holding in Buchan Horst, trades at just 3.5 times forward earnings. Another London-listed group EnQuest is at 1.2 times.

The UK is a mature basin. Companies must invest to slow its rate of decline. Production will not drop immediately as groups benefit from recent drilling campaigns. (And awkwardly, the next few years of corporate cash flows may be robust, as investment is reined in.) But redundancies could soon follow in exploration units.

Many companies want to buy outside the UK. Easier said than done. Shareholders last year objected to not one but two potential merger partners proposed by Capricorn Energy. Some may opt to consolidate. Either way, North Sea operators need a fable-like tale to convince investors they can keep the wolf at bay.

The Italian designer took cues from his much-vaunted personal style, which has caught the media's attention recently.

Zara has conscripted designer Stefano Pilati to translate his much-admired personal style into a capsule collection, WWD has learned.

About 50 styles for men and 30 for women, plus shoes and bags, are expected to go on sale in early October, backed by a campaign lensed by Steven Meisel.

Contacted by WWD, Zara confirmed the project and the Meisel shoot, but said other details are still under wraps.

Best known for helming Yves Saint Laurent in Paris and Ermenegildo Zegna in Milan, Pilati has in recent years devoted himself to Random Identities, the gender-fluid menswear line he rebooted last year, with production and distribution handled by Dover Street Market Paris.

The Italian designer has also become, to his apparent puzzlement, an icon for young generations thanks to his inimitable, offhand elegance.

The tall, bearded designer has appeared on the cover of a number of magazines recently, including Ten and the Japanese title Grind. Up next: He’ll be fronting At Large magazine, according to sources.

Pilati caught the attention of fashion insiders by modeling Giorgio Armani, styled by him, for a fashion shoot in in Numéro Berlin in June 2022.

Last year, Pharrell Williams conscripted Pilati to walk the runway for his debut as Louis Vuitton’s artistic director of menswear, which had many in the crowd cheering. The high-profile event broadcast his commanding presence to a global audience.

He’s also been a recent front-row fixture at Dior men’s shows, thanks to his friendship with Kim Jones, that French maison’s men’s artistic director. Jones, who moonlights at Fendi for women’s collections, last year tapped Pilati for a fall collection under the Roman fashion house’s new “Friends of Fendi” banner.

Prized for his keen fashion instincts, voluptuous and distinctive tailoring — plus his knack for designing eye-catching shoes and handbags — Pilati also possesses a personal “je ne sais quoi,” which is rare in menswear.

He embraces his age, favors clothes that look good on him over what might be trendy, and carries himself with aplomb.

He headlines a surprisingly brief list of designers who wear mostly clothing of their own design, though his closet is peppered with choice pieces by Yohji Yamamoto, Comme des Garçons, Rick Owens and Prada.

Pilati is said to have a vast wardrobe, and is averse to purging, knowing styles he might not fancy today could return to his favor tomorrow.

More than that, he’s a strong believer in dressing well out of respect for others, and fashion itself; in dressing to match the occasion and to feel confident in that context, and being mindful of what clothes project to the world, and how they can boost one’s mood.

It is understood the Zara capsule will mark the first time Pilati has designed collections based largely on what he likes to wear.

While Random Identities is a personal project, unveiled in 2018, the genderless, seasonless and luxurious label draws on gay and club culture in Berlin, where Pilati has based himself since leaving Zegna in 2016 following a three-year stint.

According to sources, he quietly initiated the Zara project at the beginning of 2024, initially focused on menswear but ultimately expanded to womenswear.

He applied his exacting standards to fabric choice and fit, and was said to be impressed by what the Spanish fashion retailer is capable of producing at very approachable prices.

Hardly a stranger to Zara, he has enjoyed a strong rapport and friendship with Marta Ortega Pérez, the non-executive chair of Zara parent company Inditex, and has visited its headquarters in Arteixo, Spain, a few times over the years.

Zara has pursued an eclectic, more niche approach to collaborations that have helped elevate its brand image. It’s done ones with personalities including Meisel and Charlotte Gainsbourg; cultural phenoms Barbie and “Stranger Things”; sustainable textile firms Circ and LanzaTech, plus a range of in-the-know fashion labels such as Good American, Studio Nicholson and Korean streetwear label Ader Error.

Pilati came to international prominence when he succeeded Tom Ford at Yves Saint Laurent, where he served as creative director from 2004 to 2012. Earlier in his career he worked in senior design and fabric development positions for a number of Italian fashion houses, including Miu Miu, Prada and Giorgio Armani.

Minister says new investment round a step forward for energy industry

The UK’s aim to develop cleaner energy has taken a step forward after 131 clean energy projects won state subsidy contracts in this year’s auction round — which the government said was enough to potentially power about 11mn homes.

The figure, announced on Tuesday, includes more than 5 gigawatts of offshore wind projects, helping the sector following a botched auction round last year in which no offshore wind developers bid.

The government said it was the “biggest round ever” with a total 9.6GW awarded across all technologies.

Ed Miliband, secretary of state for energy and net zero, said the government and energy industry were “securing investment into our country”, adding it was “another significant step forward in our mission for clean power”.

However, the total capacity of offshore wind projects secured may not yet be enough to meet the UK’s stretching target of decarbonising electricity supplies by 2030.

Industry had previously argued that this round, and the next one, would need to deliver about 10GW of offshore wind capacity each to keep the sector on track with government targets.

The new Labour government has said that by 2030 it wants to quadruple offshore wind capacity, triple solar power and double onshore wind, in order to meet its target of net zero power by then.

Private equity firm makes move into fast-growing direct lending market with acquisition of MV Credit

Clearlake Capital has struck a deal to buy an investment unit from Natixis that will push the private equity firm into the burgeoning private credit industry, as asset managers jostle for an entry point in the fast growing space.

Clearlake, a co-owner of the English Premier League club Chelsea FC, has agreed to acquire European-focused credit investment shop MV Credit for several hundred million dollars, according to people briefed on the matter.

The deal will take Clearklake’s assets under management to more than $90bn and expand its credit business by roughly $5bn.

The takeover comes as both private equity firms and traditional asset managers look to gain a toehold in the $1.7tn private credit industry, spending lavishly to acquire investment shops and build out their own offerings.

The purchase of MV Credit will put Santa Monica, California-based Clearlake in the $800bn so-called direct lending market, where asset managers sidestep banks to make loans privately to companies.

It will also bolster Clearlake’s public credit investment team with the addition of MV’s collateralised loan obligation business.

Clearlake is one of the fastest growing private equity firms; it managed less than $2bn a decade ago. It invested heavily in 2020 and 2021, and like other buyout shops, its portfolio is now being tested by higher interest rates.

The firm has used previous downturns to invest in distressed debt — its co-founders have roots investing in space and in corporate turnarounds — and Clearlake has been steadily building its credit offerings.

In 2020 it bought WhiteStar Asset Management, a manager of CLOs. In 2022 it lost out in a bid to buy CBAM, a credit manager then owned by Todd Boehly’s Eldridge Industries.

The auction for CBAM ultimately brought Clearlake and Boehly close together, with the pair joining forces to buy Chelsea in 2022.

“When we expanded into credit it . . . made us better investors,” José E Feliciano, a co-founder of Clearlake, told the Financial Times. “Oftentimes for us the credit business has been the canary in the coal mine . . . which has a direct effect on our private equity business.”

Feliciano said Clearlake had explored other credit acquisitions in recent years. He added that the firm planned to expand MV’s direct lending business, which could include new funds or permanent capital vehicles, and eventually broaden its footprint to the US.

“It positions us much better in a fast growing part of the market and gives us a broader presence in Europe,” he said. “Most importantly it makes us more relevant to our [investors]. We have yet another arrow in the quiver.”

Clearlake is funding the acquisition with cash on hand as well as through its revolving credit facility. The firm had previously raised capital by selling a stake in its business to Dyal Capital — now a part of Blue Owl — and Goldman Sachs’ Petershill Partners private equity unit.

Consolidation in the asset management industry has been rampant, with traditional private equity firms bulking up in infrastructure and credit as they look to build steady fee-generating businesses.

Private equity group TPG bought credit investment firm Angelo Gordon last year. Earlier this year Blue Owl announced a deal to buy Atalaya Capital Management for $450mn, months after Brookfield said it would invest $1.5bn to buy a majority stake in aviation-focused lender Castlelake.

Roughly $32bn of takeovers in the asset management industry have been struck already this year, according to data provider LSEG.

Demand for private credit has remained unsated, offsetting the lower demand for traditional buyout funds. Investors have been drawn by the relatively high yields on offer, which are often marketed to exceed 10 per cent or more.

“The demand for private credit keeps growing, and the partnership with Clearlake allows us to further address client needs around the world,” MV chief executive Frédéric Nadal said.

Natixis declined to comment.

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