Rolls-Royce shares fall as main stakeholder pushes for board refresh

Rolls-Royce’s biggest shareholder Causeway Capital has expressed concerns about the company’s existing board of directors.

  • Rolls-Royce (LON: RR) share price closed 2% lower at 114.6p on Tuesday (30 August)
  • Earlier, its largest investor Causeway Capital said it believes RR’s board ‘needs some fresh thinking’
  • The aviation engineer has also reportedly invited several investment houses to pitch to become its new house broker
  • Keen to trade Rolls-Royce shares? Open an account with us to start trading the stock.

Rolls-Royce’s largest investor calls for board update

Rolls-Royce shares closed nearly 2% lower on Tuesday, after its biggest investor called for a much-needed update of its board of directors.

Jonathan Eng, portfolio manager at Causeway Capital, which owns around 9% of the company, said one of the questions he will be posing to incoming chairman Anita Frew is whether ‘we have the right people now that will ask questions when sticky situations come up because they will’.

Although Eng believes Rolls-Royce’s current board had been ‘fine for what it was’, he believes the board ‘needs some fresh thinking’, he told The Financial Times.

Eng added that he would like the company to put greater emphasis on its power systems business, whose revenue analysts believe could surpass pre-pandemic figures.

‘With a stroke they can become an aerospace and defence company and they can fix their balance sheet issue in one go,’ said Eng.

Keen to take a chance on Rolls-Royce?

Learn how to buy, sell and short Rolls-Royce shares with IG.

Go short and long with CFDs on 16,000+ shares with the SG’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.

* Awarded the Best Online Trading Platform by Influential Brands in 2021.

Rolls-Royce to change house brokers?

The aviation engineer is also reportedly seeking to replace its long-time house brokers Jefferies and Morgan Stanley as it begins to rebuild its market valuation.

The FTSE 100 company is said to have invited other investment firms to pitch for the position.

The new house brokers, if they materialise, will be tasked with the tall order of reviving investor interest in the Rolls-Royce stock, which has been wiped out by over 50% since the start of the Covid-19 pandemic.

Rolls-Royce has declined to comment.

Read more: Top 5 UK stocks to watch in September 2021

What’s the latest stock outlook?

Nevertheless, the stock is the best-performing on the FTSE 100 in the last 30 days, having rallied over 12% during this period.

The outlook on the stock also remains positive, with analysts expecting the aviation sector to bounce back strongly in the coming years.

Case in point: JPMorgan analysts raised their price target on RR two weeks ago to 130p from 105p, on the back of higher earnings forecasts over the next three years.

The firm also predicted that a reported sale of the group’s Spanish unit ITP Aero to consortium-led investment house Bain Capital for a rumoured €1.6bn (£1.5bn) could boost free cash flow to around £750 million by 2023.

Finally, the analysts noted that Rolls-Royce’s first half underlying profits for 2021 beat consensus estimates by £536m, which indicated that its cost-cutting programme is starting to pay off.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.