LEADING ARTICLES: Body Shop gets sick of the City

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The Independent Online
Anita Roddick and Richard Branson are the business heroes of a generation. They make cash with panache. Teenagers aspire to be like them. Polls show Branson a front-running candidate should Britain go republican and need a president. We all have a soft spot for them because they stand out from a business world of smooth-shaven men in suits.

Yet our heroes are decidedly disgruntled with the British stock market. Anita is rumoured to be planning to haul the Body Shop, peppermint foot lotion, warts and all, away from the City and put it back into private ownership. In 1988, after only 18 months on the Stock Exchange, Richard Branson took his company back into the private sector. Alan Sugar has tried and failed to do the same with Amstrad.

So why do they float in the first place? From the entrepreneur's point of view there are huge advantages to flogging a home-grown creation to shareholders for cash. They get ready money either for themselves or to reinvest in the business, where perhaps in the past credit was limited. Even Branson's temporary public flotation enabled him to borrow more, because his lenders had more confidence after he returned to the private sector. A flotation is a sign that the entrepreneur has made it, that others too are willing to put their money where the founder's mouth is.

But it is no bed of roses. First, the Stock Exchange requires much more frank disclosure and new shareholders want to know about future plans in order to value the shares. Not much fun for your dynamic individual who is used to calling all the shots. If a Roddick or a Branson spies a new, exciting venture, the chances are they want to sweep in and take advantage of it, without waiting for a second opinion.

In part, then, this boils down to temperament - Branson, Sugar and Roddick simply don't like being told what to do. And perhaps it is inevitable that the kinds of people who take risks like this will always feel uncomfortable with big financial institutions breathing down their necks.

For to be fair to the City, the Body Shop has been a successful public company. The City found the money to permit rapid growth from a company worth pounds 5m in 1984 to over pounds 250m today. But recently, questions have arisen about the Body Shop's performance, especially in the US.

When Branson faced the second-guessing, he complained that the City was more interested in the kind of short-term profit growth delivered through acquisitions than the bold ventures Virgin was planning. This raises the question of whether the City is as good as it should be at backing the kind of risk that turns creative medium-sized companies into very large ones. The Bransons, Roddicks and Sugars do not fit easily into the short- term performance grids of the financial institutions that invest our pension contributions.

That is a pity, but we shouldn't cry over spilled jojoba oil. Ms Roddick will probably thrive again back in her private domain. It's hard to avoid the conclusion, however, that the City will be a somewhat duller place.

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