INVESTORS need to stop looking at GUS as a retailer and reclassify it as a business information group. GUS made more profit from its Experian division in the six months to September than from Argos, Homebase and Burberry put together. The dominance of Experian in GUS will become even more apparent once Burberry is demerged next month.

The division is not well understood. It provides credit reports on prospective customers for banks and retailers; it processes credit card transactions; it processes application forms; it handles mailing lists and other marketing information for business customers. And it is now starting to sell to consumers, offering information on their credit rating and weapons to prevent identity theft.

It has ridden on the coat-tails of the revolution in mass-marketing and information technology and exploited the fact that most businesses are far too big and remote to know their customers personally. It has 50,000 business clients, holds credit information on more than 300 million households in the West and has barely begun to address emerging markets in Asia and Eastern Europe.

Experian’s latest figures represent the seventh successive half-year of double-digit sales and profit growth. After a 36 per cent rise in first-half profits to £200 million, it looks on course to make more than £400 million in the full year.

What about the credit cycle? Experian has waxed fat on an explosion of credit in the West over the past few years, but can it still grow when consumers start to pay debt down? Yes, according to GUS’s chief, John Peace, who claims the business is in fact quite counter-cyclical.

Intriguingly, he says that Experian’s competitors in America all trade on 18, 19 or 20 times after-tax earnings — in other words they are much more highly prized than retailers. If that kind of rating were to be applied to Experian it could be worth about £5 billion.

GUS plans to demerge it, once it has rid itself of Burberry. As the separation draws near, Nottingham-based Experian is likely to come under scrutiny as never before. If Peace is right about the quality of the business, that should translate into strong demand for GUS shares, which rose 3 per cent yesterday to 877p.

For now, GUS’s prospects are overshadowed by the high street gloom that Argos and Homebase have been unable to shrug off. That represents a good buying opportunity.

Man Group

THE past few months have been a purple patch for Man Group. A year ago the hedge fund manager was looking a bit bruised. All four of its main hedge fund strategies were performing poorly. There was talk that the fat years for absolute return funds were over. Too much money was chasing too few opportunities, it was argued.

There was and is some truth in those concerns. But chief executive Stanley Fink was able to silence the doubters yesterday, with all four fund strategies delivering strong performance. That produced a fivefold increase in performance-fee income. Ordinary management income was also up because of the larger volumes of money that Man now manages.

The wobble a year ago persuaded some investors to pull out, but new mandates still comfortably outpaced redemptions, producing a $1 billion net boost to funds under management in the half year.

The derivatives broking division, Man Financial, is also thriving, putting in a 19 per cent increase in profits to $83 million. The acquisition of the regulated assets of Refco, its scandal-hit collapsed rival, will boost its prospects next year.

However, hopes that the broking side could be demerged any time soon have receded. It will take at least a year to integrate the new business.

Man is now on target to make comfortably more than $1 billion before tax for the full year. Mr Fink is clearly confident. The interim dividend was raised by 30 per cent in dollar terms to 31.2 cents (18.07p), though this was partly about rebalancing — paying a greater chunk of the total dividend at the half year.

Dealers applauded yesterday’s figures, marking the shares 78p higher to £17.60, close to their record and the highest they have been for 18 months. This was in spite of a placing at £17.00 to raise £125 million.

Man Group is not as risky as it might appear. Performance fees will always be highly volatile, as will brokerage revenues, but the bulk of Man’s fees are not dependent upon performance. Only if investors start withdrawing money does it face serious pain. Hold.

BPB

EVEN with £3.89 billion dangling before them, there will be a few BPB shareholders reluctant to accept Saint-Gobain’s agreed bid. The plasterboard group is a gem of a business and could carry on as an independent very nicely, thank you.

But every shareholder has their price and for most the French offer of 775p is it — though purists will say the true price is only 767p because an 8p dividend previously promised for January has been scrapped.

The offer represents a premium of 51 per cent to the price before Saint-Gobain’s approach. It is decently above the 675p offer rejected in July and the 720p rejected in August. By some measures, it is the highest price paid for a firm in this sector at 20 times last year’s earnings and 11 times earnings before interest, tax and depreciation. For comparison, Aggregate Industries fetched 16 times and nine times, respectively.

A rival bid is highly unlikely. Holders will have to wait until Christmas to see their money. After yesterday’s run-up in the price to 769½p, shareholders might just as well sell in the market at once.

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