Bell Pottinger’s second-largest shareholder has walked away from the business by writing off its investment and handing back the stake to the struggling PR firm.



Chime, co-owned by US investment firm Providence Equity Partners and Sir Martin Sorrell’s WPP group, has given up trying to sell its 27% holding after a scandal over a Bell Pottinger campaign in South Africa severely damaged the agency. On Monday, the British PR trade body expelled Bell Pottinger from its ranks after the firm orchestrated a campaign to stir up anger about “white monopoly capital” and “economic apartheid” for one of South Africa’s wealthiest and most controversial families.

“We no longer have a stake in Bell Pottinger,” confirmed a spokesman for Chime.



As Chime is a minority shareholder in the PR agency, its stake, which is thought to have been valued at about £5m, will be written down as a non-cash charge on its balance sheet.



HSBC said on Tuesday it would no longer use Bell Pottinger following the South Africa furore. Britain’s biggest bank, which has weathered its own public relations disaster after its Swiss arm helped clients evade tax, is the fourth business to distance itself from the PR firm.

Q&A What was Bell Pottinger doing in South Africa? Show Bell Pottinger’s 'economic emancipation' campaign used traditional and social media, including​ a fake blog and​ Twitter account, to target wealthy white South African individuals and corporations. The agency’s alleged role was to stir up anger about 'white monopoly capital' and 'economic apartheid' to draw attention away from the wealthy​ Gupta family, who have been accused of benefiting financially from their links to President Jacob Zuma. Bell Pottinger, which created and commissioned content​, did not invent​ 'white monopoly capital' but used the ​term 'on occasion'​. ​It also used other tactics, such as misleading or undermining journalists questioning the campaign.

“We have used Bell Pottinger for specific projects in the past but will not be doing so in the future,” the bank said in a statement.



TalkTalk, one of the UK’s biggest broadband operators, had a contract with Bell Pottinger which ended earlier this year. The company is set to put out a tender for a new corporate PR and public affairs contract and it is understood that Bell Pottinger will not be asked to submit a bid.

Waitrose, which prides itself on its ethical stance and uses Bell Pottinger, would not say whether it will continue to employ the embattled agency. “We don’t comment on specific supplier relationships,” said a spokeswoman, who refused to elaborate further.

Bell Pottinger has already lost at least five clients over the furore: Richemont, the Swiss luxury company headed by South African businessman Johann Rupert; Investec, the South African investment group; and Acacia, which owns gold mines in Tanzania; Clydesdale Bank; and construction firm Carillion.

Further uncertainty over Bell Pottinger’s future was fuelled when its largest shareholder, James Henderson, resigned as chief executive on Sunday.

Lord Bell, who resigned last summer from the company he co-founded, told Newsnight he thought it was “almost certain” Bell Pottinger would not survive the scandal involving the firm’s work for the Gupta family.



“I think that it is probably getting near the end, I mean you can try and rescue it but it won’t be very successful,” he said.



Lord Bell agreed a £20m deal to buy the Bell Pottinger branded PR businesses from Chime, its publicly listed parent company, in 2012.

Chime was taken private by Providence, which owns a majority stake, and WPP in a £374m deal in 2015.



Chime took part in Bell’s management buyout by taking a 27% stake that helped support the launch of the independent Bell Pottinger business. Bell Pottinger is known to have appointed City advisers up to 18 months ago to explore strategic options, including a sale of the business, but this fizzled out last year.

Bell Pottinger, which is ranked as the 13th biggest PR consultancy in the UK, employing an estimated 190 staff, made about £4m in profits and £42m in revenues in 2015, according to the most recent publicly available financial data at Companies House. It is thought the business has maintained roughly this level of revenues and profits since then.





