Category: Transactional and Investment Banking

fintech
FX and PaymentTransactional and Investment Banking

New Financial Technologies Are Changing Lives

fintech

New Financial Technologies Are Changing Lives

By Ronald Miller, CEO, Paysend

Fintech is revolutionising traditional financial services and helping to change lives. PwC, the professional services firm, reports that the majority in the banking sector believe at least some part of their business is under threat by the fintech revolution. 

New fintech firms are disrupting traditional financial services and are giving birth to a whole new generation of starts ups.These start ups are changing the way we move money around the world with significant and positive economic and social implications.

Most financial services used to be the preserve of big businesses.  Now new technologies are automating processes, reducing start-up costs and making it possible for challenger brands to disrupt this industry. However, the changes we witness are creating far more than a shift of power from big business to new players in the sector. 

Fintech is giving consumers greater control of how they pay, hold and spend money.  It is creating a revolution in the way that funds move between people and countries. Global money transfers, where workers in one country send money to their families back home, is not a new phenomenon. 

However, World Bank figures show that there are now 270m people globally who live outside their home country, sending an estimated $689bn home.  This is almost ten times as much as it was in 1990.

Very often these transactions are life changing for those that send or receive them. Money earned in the UK often goes further in emerging economies.  Some of it goes to provide seed money for small enterprises and family businesses.

Global money transfers will soon overtake foreign direct investment as the biggest inflow of capital into developing countries.  In some countries, the money received will represents a third of their total GDP.

Technology has helped foster this dramatic rise. What was once a laborious, slow and expensive process to move money across borders is now simple, quick and low cost. Fintech has made it easier than ever to move money around the world. 

Over the last two years, at Paysend we’ve helped nearly 1.3m customers transfer money to more than 70 countries worldwide. We grow by each day as more people use our service for instant and flat-fee transfers. We believe in the power of technology to ease money transfers to allow more people to benefit from it and as a result imnprove their lives.

Ronald Millar is CEO at Paysend, the UK-based global fintech company, with a unique card-to-card money transfer technology, serving 1.3m customers worldwide.

investments
BankingTransactional and Investment Banking

British Business Investments makes £15m Tier 2 capital facility available to PCF Bank

investments

British Business Investments makes £15m Tier 2 capital facility available to PCF Bank

 

British Business Investments (BBI), a commercial subsidiary of the British Business Bank, has announced a new £15m Tier 2 capital facility to specialist bank, PCF Bank.

PCF Bank has a long history as a specialist financier of vehicles, plant and equipment. Established in 1994, and launching banking services in 2017, PCF Bank has helped more than 18,000 customers with purchasing business critical assets for their businesses.

The facility will enable the Bank to draw on additional capital as required, allowing it to utilise capital in an efficient and earnings enhancing manner as the business grows. This investment could support up to an additional £125m of asset-based lending to UK smaller businesses.

The £15m capital investment is a Tier 2 capital facility provided through BBI’s Investment Programme, which is designed to increase the supply and diversity of finance for smaller businesses by boosting the lending capacity of challenger banks and non-bank lenders. Since it launched in 2013, the Investment Programme has committed over £900m to providers of finance to UK smaller businesses.

Catherine Lewis La Torre, CEO of British Business Investments, said: “This commitment to PCF Bank supports British Business Investments’ objective to increase the diversity of supply of business finance. Banks like PCF help diversify the finance market, and in turn contribute to more choices for smaller businesses across the UK.”

Scott Maybury, CEO of PCF Bank, said: “PCF has been helping UK SMEs purchase the assets they need for over 20 years. Since launching as a bank in 2017 we have been able to increase the size of our lending book driving profitability in a sustainable way. This facility from British Business Investments will allow us to continue to grow and support the UK private sector.”

The Investment Programme unlocks increased development capital to speciality lenders and challenger banks serving smaller businesses and enables BBI to support the development of diverse finance markets.

Retirement fund
Cash ManagementPensionsTransactional and Investment Banking

Retirement fund is top saving priority for Brits

Retirement fund

Retirement fund is top saving priority for Brits

 

Over half (58%) of Brits wish they had invested in their future and retirement at an earlier age, according to new research by savings and mortgage provider Nottingham Building Society, known as The Nottingham.

The survey of 2,000 UK adults looked at the biggest saving priorities for the nation, and what age we wish we had started investing in different aspects of our lives, from health and careers to money management. A retirement fund was ranked as the biggest saving priority, despite only 29% of respondents admitting to actively saving towards their future.

The top ten most important saving priorities for Brits are:

  1. Retirement fund

  2. ‘Rainy day’ fund

  3. House deposit or increasing equity

  4. Holiday fund

  5. Funds to partake in my hobbies / outside of work activities

  6. Debt repayments

  7. New car

  8. Children’s saving account

  9. Children’s education

  10. Wedding fund

Debt repayments didn’t make the top five saving priorities for the nation, however, of the respondents who are currently saving, paying off or planning to pay off their debt, this saving was ranked second in importance, indicating that those who are currently in debt are prioritising this over saving for other factors such as a house deposit (ranked fourth in importance), or a new car (ranked seventh).

However, when it comes to what Brits are actually saving for, the most common goal was a ‘rainy day’ fund, with over a third (34%) of Brits currently saving towards this. Interestingly, more than double are saving towards a holiday (29%) than a house deposit (13%), despite a house deposit being ranked as a higher priority overall.

When it comes to the ages the nation wish they had started investing in different aspects of our lives, Brits found that they wished they had invested towards their retirement at age 31, when on average they actually began investing at 39 – almost a decade later. On average, UK adults begin saving towards a ‘rainy day’ fund at 34, despite wishing they had started at 28.

Retirement data

 

Jenna McKenzie-Day, Senior Savings Manager at The Nottingham, said: “Our research found that on average, homeowners wish they had begun planning to buy their first home three years earlier than they started, with a similar picture being painted for those saving for their future. Interestingly, it found that Brits wish they had started their retirement fund a staggering eight years before they actually began saving.

“Whether you are saving for your first home or starting your retirement plans, products such as the LISA, which is available for those looking to plan for their future, offer a 25% government backed bonus on annual savings  up to £4,000, those extra eight years of savings could have increased their future savings by a potential £8,000 – making it the perfect product to start your saving journey.”

To find out more about the Nottingham’s LISA, visit: https://www.thenottingham.com/lifetime-isa/

CX-Platforms
BankingTransactional and Investment Banking

Purpose-Built CX Platforms ensure banks are meeting the needs of vulnerable customers

CX-Platforms

Purpose-Built CX Platforms ensure banks are meeting the needs of vulnerable customers

 

FCA consultation shines spotlight on fair treatment, putting pressure on financial services to implement suitable solutions.

In July, the Financial Conduct Authority announced the launch of a consultation on proposed guidance for firms on the fair treatment of vulnerable customers. As a leading provider of Customer Experience Management (CEM) solutions, Clarabridge, Inc., is stressing the ability of dedicated technology to maintain compliance and ensure fair treatment of all customers. Without it, the firm says, banks and financial services companies are in danger of failing customers and breaching regulations.

The Clarabridge solution is widely used in the finance sector, and it is already helping companies to develop interactive dashboards to assist contact centre and customer service staff in monitoring the experiences of vulnerable customers.

“Any time customers make contact, it is not always easy for customer service agents to quickly understand their challenges,” said Jagrit Malhotra, Managing Director EMEA at Clarabridge. “Vulnerable customers may face a variety of difficulties and obstacles that affect their interactions. Our technology allows banks and financial institutions to analyse these interactions in great detail, thereby uncovering the sentiments that customers are expressing, the effort that they are making to access services, and how this can be improved to enhance the overall journey.”

The FCA has stated that whilst many firms have made significant progress in how they treat vulnerable customers, there needs to be more consistency. It says that in some cases, a failure to understand their needs is leading to harm.

In the last six months, Clarabridge has designed tailored dashboards for a prominent UK bank and a leading insurance company to help them analyse data from sources such as phone calls, web chats, email and social media posts. By identifying and addressing negative feedback, including that from vulnerable customers, financial organisations can prioritise improvements to help these customers while also addressing areas of compliance or regulatory risks.

“Financial services companies can ensure fair and consistent treatment of customers by proactively identifying the root causes of problems,” continued Malhotra. “The news features reports of banks discriminating against the disabled in overdraft charges, for example, or failing to indemnify vulnerable customers against fraud. We can use highly advanced analytics to help organisations quickly tackle issues, consistently meet FCA guidelines, and gain a deeper understanding of the very real needs of their customers.”

Clarabridge’s AI-powered solution also meets the banking industry’s need for fast-turnaround implementations. Its modules are customised to the unique workflow of the industry and include Complaints & Compliance Analysis, Digital Experience (Mobile App & Website), Branch & ATM Experience and Contact Centre Experience.

To learn more about this solution for retail banking and other industries, please visit: https://www.clarabridge.com/solutions/industry/banking/

santander
ArticlesBankingCash ManagementFinanceTransactional and Investment Banking

Santander Consumer Finance is expanding its online loan application platform across the UK

santander

Santander Consumer Finance is expanding its online loan application platform across the UK delivering an end-to-end digital solution

 

Santander Consumer Finance (SCF) is expanding its online loan application platform across the UK delivering an end-to-end digital solution for dealers further strengthening its commitment to growing the market.

The national launch of Apply Online which offers e-sign capability means customers can calculate the finance they need, receive immediate approvals and sign documentation at home or in showrooms ensuring that dealers remain in control.

Delivery of the end-to-end digital process has taken nine months since the launch of SCF’s online calculator in December and involved substantial financial and resource investments at SCF.

The calculator has proved popular – customers have generated more than 4.1 million quotes and 51 dealers have signed up for the calculator. Apply Online, which was successfully tested over the past month, is now available to all dealers using the calculator.

SCF’s digital solution is integrated into dealers’ websites and installation takes minutes for dealers who already have the calculator. SCF is providing additional support to help dealers make the most effective use of the digital proposition.

The system is designed to provide a simple, fair and personal experience for car buyers and builds on the success of SCF’s partnership with Volvo Car UK launched in April.

Stewart Grant, Santander Consumer Finance Commercial Director said: “We’ve worked hard to design a market leading end-to-end digital solution which ensures   dealers retain control of customer relationships while benefiting from our brand power.

“The financial investment and the time spent by our team in developing and delivering the digital transformation emphasises how committed we are to support our dealer network in maximising sales and profitability within the growing digital market.”

Dealers interested in using the calculator or wishing to register interest in the Online Application platform should contact their Business Development Manager or visit: www.santanderconsumer.co.uk/dealer

R&D tax relief
FundsTransactional and Investment BankingWealth Management

Capital on Tap Celebrates the Milestone of Lending Over One Billion Pounds to Small Businesses

R&D tax relief

Capital on Tap Celebrates the Milestone of Lending Over One Billion Pounds to Small Businesses

 

In seven years from creation, the fintech company Capital on Tap, celebrates a major milestone of lending over 1 billion pounds to more than 65,000 small and medium enterprise businesses across the UK. 

By 2018, Capital on Tap had lent £500m to small businesses, and in the short timeframe that followed to September 2019, has now doubled this number to hit the milestone of £1bn. The quick, two-minute online application has drawn-in customers from various industries who praise the lending service for its ease of use. 

The one billionth pound customer Elaine Speirs, founder of Speirs Consultancy Ltd in biopharmaceuticals, said: “It was very easy, very fast. I don’t remember having to have a conversation with anyone, and I got my credit card within a couple of days.”   

“The app is really easy to use on my phone, and there’s a website where I can track all payments; it’s just very simple, I don’t really have to think about it.” Elaine continued that “my own bank turned me down as I was a new business, and without even applying for a loan – that was after 25 years of banking history with them, which I was quite taken aback by.” 

The Capital on Tap ‘soft searching’ function is ideal for new business owners as it allows customers to find out if they’re eligible for a loan without impacting their credit score. This method challenges typical lenders and empowers customers, particularly benefiting those in rural parts of the UK who could suffer approval delays of up to three weeks. In addition, once the Capital on Tap fund is agreed; the money is available online in a matter of minutes, streamlining the lending function and supporting those who may struggle with traditional lending platforms. 

Support given by Capital on Tap has been commonly found to facilitate travel, allowing customers to work internationally without charging any extras. Sean Swart, founder of PICS Consultancy Ltd, highlights that “I am often required to move around as part of my job and the Capital on Tap card removes stress around cash flow created by expenses, mainly those from travel expenditure which is created as a by-product of my job.” 

David Luck, CEO at Capital on Tap, commented: “We started Capital on Tap in 2012, with a mission of making it faster and easier for small and medium enterprises to obtain working capital. Since lending money to our first customer back in 2013, I never thought we would have lent over £1bn to more than 65,000 small businesses in just seven years.” 

“We have worked to develop a lending platform that not only makes funding easier for small businesses, but also provides a service for traditional banks. Not only do we pride ourselves in supporting small businesses in the main cities, we provide a unique service for those in provincial areas, where traditional banks fall short.” 

For more information, visit the Capital on Tap website: https://capitalontap.com/

Hyper short-term investments what are millennials investing in
FinanceTransactional and Investment Banking

Hyper-short-term investments: what are millennials investing in?

Hyper short-term investments what are millennials investing in

Hyper-short-term investments: what are millennials investing in?

Despite the stereotype of the younger generation being frivolous with their money, it seems they are actually one of the savviest generations when it comes to turning a profit on their own. While they are hesitant to invest in stocks, millennials and generation Z are tapping into the hyper-short-term investment of fashion and beauty. For example, there’s a huge market for buying and selling trainers at the moment, or in vintage fashion.

In particular, limited-edition trainers have a huge appeal across the world, with people willing to camp outside of stores to pick up a particularly lucrative pair.


Art flipping

According to Business Insider, rich millennials are snapping up art as financial assets rather than as part of a potential collection — 85 per cent of millennials purchasing artworks say they are aiming to sell in the next year. Buying art with the intention of selling it on quickly is known as art flipping, and it’s something of a controversial subject in the art world. There are some who consider the process of art flipping as a potentially devaluing practice that harms the artist and their work.

The process can also seem more logical than artistic too, as many such purchases are made purely on the work’s monetary value. However, the piece’s social media hype can also spur rich millennials to part with their cash in a hopes of a quick resale profit — Instagram has been highlighted by Adweek as a viable platform for creating social media adoration for artists.


Clothes

One of the reasons why the younger generations are turning more to side-hustles and reselling as forms of investment is that the turnover is incredibly fast thanks to apps like Depop. There are so many stories about how entrepreneurial millennials are sniffing out limited edition items from the most popular brands, such as Supreme, during their famous limited edition ‘drops’, then rapidly reselling them.

Of course, the initial purchase is an investment, with many resellers spending hundreds of pounds or more on such a venture, but the resale of these goods can certainly turn a profit. It also taps effectively into the Instagram world we’re living in too. Sellers often combine their shop platforms with their social media accounts to merge both modelling and selling the items.


Shoes

The most sought-after trainers tend to be either limited edition or classic trainers for that much-loved vintage style. People are willing to set up camp outside a store before a particularly hyped drop of limited-edition trainers, in order to grab them at retail price, then sell it on for much higher prices. Some might seek to resell the items quickly, but there’s certainly a case to be made for popping a brand new pair of limited edition trainers away for a few years before reselling in hopes that their much-hyped status will only increase that price tag as the years roll on.

Arguably the biggest market in reselling is that of sneakers and trainers. Much like clothing, the main draw here is in limited edition shoes — but the sneakerhead culture is not anything new. In fact, it began nearly 30 years ago, though it’s enjoyed a huge resurgence in the last few years.

 
Sources:

https://www.sofi.com/blog/millennial-investing-trends/

https://www.adweek.com/digital/influencing-the-art-market-millennial-collectors-social-media-and-ecommerce/

https://www.businessinsider.com/rich-millennials-investing-art-flipping-build-wealth-2019-4?r=US&IR=T

https://www.standard.co.uk/fashion/should-you-be-investing-in-sneakers-a4014486.html

https://www.theguardian.com/fashion/2017/oct/23/teens-selling-online-depop-ebay

Transactional and Investment BankingWealth Management

Promising Regional Start-up Gets Funding from Hungarian Companies

  • Enter Tomorrow Europe, a venture capital fund operated by Lead Ventures has gained share in Czech start-up Neuron Soundware, utilizing investments from MOL and Eximbank.
  • The Czech start-up analyses sounds and vibrations to detect when industrial machines need maintenance.
  • Apart from the Hungarian companies, the EUR 5,7 million investment is also supported by two Czech capital funds, Inven Capital and J&T Ventures.

Lead Ventures continues to expand its portfolio with the help of MOL, Eximbank, together with Czech capital funds. Together, the business partners invested EUR 5,75 million in Czech company Neuron Soundware. The start-up is one of the first companies in the region to implement sound-based diagnostics of industrial machinery, which greatly helps factories using such equipment.

Enter Tomorrow Europe, a capital fund operated by Lead Ventures, supported by MOL and Eximbank used funds from Hungary for its latest /5000 venture capital investment. Together with Inven Capital, a member of ČEZ Group, Lead Ventures gained share in the Czech Neuron Soundware company.

Neuron Soundware was founded as a start-up in Prague in February, 2016. Currently, they employ 20 experts and last year, they had revenue of almost half a million Euros. The company provides AI-based solutions for several industries, including the energy industry. Their software analyses the sounds made by industrial machines, and can detect even the smallest of changes or unusual noises, indicating that the equipment is faulty or in need of maintenance. Their technology is already used by several global corporations, including Daimler, BMW, Innogy, E.ON, Airbus and LG.

“We know exactly how pumps, gearboxes, cylinders, electromotors, or compressors should sound. The sounds of all regular components of a machine are stored in a database. But that is not enough, our artificial intelligence software is able to distinguish problem noises from regular process hum and surrounding sounds, giving the customer the certainty that the machine will not pull off any unpleasant surprises,” says Pavel Konečný, founder and CEO of Neuron soundware.

“Predictive maintenance is a part of Industry 4.0. Neuron’s exciting technology has the potential to create a real break-through in this area. We trust that, with our newest regional investment, this innovative solution can improve the efficiency of several industries,” added Ábel Galácz, CEO of Lead Ventures.

“Start-ups from Central Europe, which have already been tested, have great potential to break through in global markets. As part of our strategy, we are looking for innovative solutions that can increase effectivity of technical processes in industrial services. Like our recent entry into Slovak GA Drilling, our entry into Czech Neuron Soundware is an example of a successful connection of small start-ups with a strong international company for further growth,” said Oszkár Világi, MOL Group Chief Innovation Officer.

The full value of the investment is EUR 5.75. Almost half of that sum is provided by Lead Ventures ETE, using funds from MOL and Eximbank. The rest of the price is covert by Inven Capital and Neuron’s previous investor, J&T Ventures.

Managing over EUR 100 million, Lead Ventures aims to support start-ups with innovative ideas all over the CEE region, assisting them to take their products or services to the global market. MOL has been supportive of the goals of the investment fund before. In March, for example, Lead Ventures signed a EUR 4,2 financing deal with the Slovakian GA Drilling company. GA Drilling focuses on developing a revolutionary electronic plasma technology, creating plasma drills capable of penetrating deeper layers of the ground at a reduced energy cost, making geothermic energy more accessible. As part of the deal, experimental drill heads are now being tested at MOL’s own hydrocarbon facilities.

Transactional and Investment Banking

Mike Bagguley, Former Barclays International COO & Financial Trading Industry Leader, Backs Inforalgo with Investment & Board Role

Inforalgo, the Capital Markets data automation specialist, has announced that Mike Bagguley, formerly COO at Barclays International and a respected financial investment industry leader, has invested in the firm and joins as a board advisor.

Mike, who brings a wealth of experience gained in senior trading and leadership positions across Barclays Investment Bank, approached Inforalgo during a search for firms that offer the opportunity to significantly reduce risk and costs in the market’s businesses.

“Inforalgo’s approach is enormously appealing, because it rationalises the technology and operating platform that firms need to manage,” he said. “Its portfolio of powerful data integration solutions allow transactions to be recorded, processed and reported in a single action, reflected end to end, electronically aided by smart automation. These independent, smart data automation solutions remove considerable pain for financial institutions and broker-dealers, allowing them to get on with doing optimal deals without worrying about how everything will be input, processed and reported.

“In this volatile market where new opportunities come and go quickly, and international regulators are continuously updating and adding to transparency and reporting requirements, Inforalgo has identified a sweet spot with a series of high-impact solutions that are unmatched,” he added.

“Inforalgo has an unrivalled track record as platform-independent data connectivity and compliance automation specialists, and its expansion into automated cross-jurisdictional regulatory reporting is further confirmation that it is ahead of the industry curve.”

Commenting on Mike’s appointment and his injection of funds to support the company’s next growth phase, Jordan Ambrose, Inforalgo’s CEO, said, “We are delighted and honoured to have Mike’s involvement and investment, and excited to be building out our senior management team at this pivotal point in our company’s development and expansion. Mike brings with him a wealth of industry experience and insight, and we look forward to his invaluable input.”

Mike Bagguley
Corporate Finance and M&A/DealsTransactional and Investment Banking

Nevion and Sony establish a strategic partnership to provide enhanced IP broadcast production solutions

Nevion, award-winning provider of virtualized media production solutions, today announced that it has agreed with Sony Imaging Products & Solutions Inc. (“Sony”) to establish a strategic partnership in the area of IP-based solutions for broadcasters and other industries. To reinforce this partnership, Sony will also become a leading investor in Nevion by acquiring a minority stake in the company through a share purchase agreement.

In recent years, Nevion has established itself as a leading provider of IP media network solutions for the real-time transport, processing, monitoring and management of the video, audio and data signals that are used in production. This partnership with Sony will allow customers to benefit from more advanced, fully integrated and standards-based media production solutions that combine outstanding media network technology with world-leading equipment such as cameras and switchers. These solutions will make it easier for customers to move to IP in their facilities and in remote production, as well as improve their ability to create content – for example through better sharing of resources.

“This is an exciting alliance for Nevion, its customers and its partners,” said Geir Bryn-Jensen, Nevion CEO. “It is based on very complementary solutions, products and know-how, and will allow us to offer a lot more to our customers, both existing and potential, than we have been able to until now. It will also give us a much greater scalability and reach.”

“Through this strategic partnership, we will be able to expand our end-to-end IP solution offerings that allow customers to produce live content connecting multiple locations”, said Mikio Kita, Senior General Manager, Media Solution Business Division, Professional Products & Solutions Group, Sony Imaging Products & Solutions Inc. “Working together with Nevion, we will deliver an integrated and optimal experience for our customers.”

Nevion’s CEO, Geir Bryn-Jensen concluded: “This strategic partnership with Sony is a real vote of confidence in Nevion, its vision, its strategy, its people and its IP-based media network solutions. We look forward to working closely with Sony to maximize the benefits for our customers.”

For more information about Nevion and its solutions, please visit the Nevion website.

Stock MarketsTransactional and Investment Banking

Duncan Kreeger launches prop tech business TAB APP

West One loans founder and CEO of TAB Duncan Kreeger has launched a fractional ownership proposition, TAB APP. Investors, once the app is fully launched, will be able to invest in commercial and residential property in three clicks.

Duncan has created a simple explainer video to make the complicated world of fractional ownership, rental yields and investing simple for potential users. Visit app.tabldn.com for more information

Watch the video below

Duncan Kreeger said: “Having worked within the property and financial services industry all my life I’ve long thought about how I can make a serious change to make people’s lives easier and allow the general public to have access to rental returns without the heavy investment of a BTL purchase. That’s why I bring you TAB APP, we’ll give users long term sustainable returns on commercial and residential property from investing from £1,000. I’m delighted with what we’re creating with my app developers Elemental Concept.”

The TAB APP is not yet ready for users to download and invest, this will be coming within the next month as the APP is currently going through the first batch of user testing. Users can register to test the app by emailing [email protected]

Capital Markets (stocks and bonds)Transactional and Investment Banking

London Tech Week: Blockchain for Business Summit launches today

Blockchain for Business Summit starts today as part of TechXLR8, London Tech Week’s flagship event. Now in its third year, the summit leaves hype, speculation and cryptocurrencies behind to focus on real-world use cases from industries and business leaders who are reaping the rewards of blockchain right now.

Daniele Mensi, CMO of NextHash, spoke at the Global Blockchain Congress in Dubai and gave the following commentary: 

Digital securities, Security tokens, tokenised securities or investment tokens are Financial securities that are compliant with SEC regulations and can provide investors with equity, dividends, revenue or profit share rights. With Digital Security offerings, the lack of complexity ensures that fundraising can be consolidated and the reduced need for middlemen means that investors experience a shorter lockup period. Often, these digital securities represent a right to an underlying asset such as proof of real-estate, cashflow or holdings in another fund. These benefits are all written into a smart contract and the digital securities are traded on a blockchain-powered exchange.

Because the blockchain market is decentralised and active 24/7 by nature, it is in a state of virtual liquidity when compared with the traditional financial markets. That is, one can trade 24 hours a day, 365 days a year and the market is never closed.

Ana Bencic, President of NextHash, has provided commentary on the potential of blockchain technology.

“Cryptocurrency trading spearheaded the rise of blockchain and these now provide a conduit between investors and businesses, utilising the technology to provide secure transactions for companies and institutions. As blockchain technology grows ever more popular with investors and traders everywhere, countries and companies that have adopted the technology at an early stage will be the front runners of this new technology. Others would be wise to use London Tech Week as an opportunity to see the true benefits of blockchain in financing businesses and get involved in tomorrow’s unicorns now.”

Transactional and Investment Banking

Ashfords LLP advises shareholders in Ocado’s £17 million investment into vertical farming

Earlier today, Ocado announced a £17 million investment into the vertical farming industry, including an investment into Jones Food, Europe’s largest vertical farm. The investment into Jones Food, represents one of the largest investments into a UK agritech company so far this year. Law firm, Ashfords LLP, advised Guinness Asset Management, the majority shareholder of Jones Food, in the transaction.

Vertical farming is an emerging industry in which crops are grown indoors in controlled environments, reducing waste, water and pesticides. Ocado has stated that it will use its know-how in automation and distribution to make Jones Food more efficient and potentially integrate it with other Ocado services to be able to deliver fresh products to customers within an hour.

Giles Hawkins, Corporate Technology Partner at Ashfords commented: “We’re delighted to have worked with Guinness Asset Management on this transaction. Vertical farming as in industry has attracted a lot of venture capital investment over the years, but is only now beginning to deliver as energy costs decline and the technology and know-how have developed. We are looking forward to seeing what the company will do with Ocado’s backing.”

The Ashfords team was led by Giles Hawkins and included Jonathan Groves and Nicola Manclark.

Transactional and Investment Banking

Symphony Communications Doubles Down on Automation and Global Community Growth at Annual Innovate Asia Conference

Launches Symphony Market Solutions to Address Growing Industry Need for Automation

Appoints Mrs. Queenie Chan as New Head of APAC

Symphony Communication Services, LLC, the leading secure team collaboration platform, is doubling down on investment in workflow automation and global growth. Ahead of its annual Innovate Asia Conference, and alongside the concurrent announcement of its latest Series E fundraise of $165 million, the company today revealed:

  • The launch of Symphony Market Solutions to address the growing need in financial services for system integration, digital transformation and workflow automation
  • Reaching a milestone 1,000 unique bots created and running on the Symphony platform
  • Appointing Mrs. Queenie Chan as the new Head of APAC to lead growth in the region

“Symphony, trusted by over 405 companies and 450,000 users, has already proven that its unique security and compliance model is indispensable to companies who care about data security and sovereignty. With the foundation of our business solidly anchored we are now focusing on how we can deliver the deepest benefits of our platform to our global community, who rely on the Symphony to perform mission critical work every day,” said David Gurle, founder and CEO at Symphony. “Deep value, for us, means providing users better and faster ways to work. Doubling down on workflow automation with Market Solutions is the first step in achieving this vision.”

Further information and demonstrations regarding today’s news will be shared live at Symphony’s annual Innovate Asia Conference, held in Singapore on June 13, 2019. 

 

Symphony Solves Complicated Workflows With Launch of New Market Solutions

Symphony today launched Symphony Market Solutions to address the growing need for workflow automation in financial services and other sectors.

Symphony Market Solutions is a suite of standardized, licensable software solutions purpose-built to simplify and automate complex and time-consuming workflows. Market Solutions will include: financial services workflow tools purpose-built for automation of trade life-cycle, enhancing client services across banking and wealth management and more; and enterprise integrations and workflows for IT, operations, sales, HR, developers and more. Symphony customers are already using these Solutions to achieve business outcomes including improved client experiences and employee productivity.

Specific Market Solutions available for customers today include a new workflow tool called SPARC, which lets Buy-side and Sell-side traders seamlessly shift from real-time conversation to RFQ negotiation, all in the same chat room; and other solutions such as integrations for Salesforce, ServiceNow, Confluence, Jira and GitLab. 

Since introducing its Software Developer Kit (SDK) in 2018, Symphony clients have developed more than 1,000 unique bots operating on the platform today. This number indicates the growing interest within the financial services community to leverage Symphony for key workflow automation initiatives. With Market Solutions, Symphony is now taking this to the next level by offering customers packaged and licensable solutions for the most requested workflows and automations.

“When we looked at the sheer number of bots that customers were developing, and we began to see patterns emerge when customers talked about the use cases they were looking to solve with them. This led us to identify the need for a standardized set of workflow automations that could be deployed across the Symphony community – as opposed to bespoke development of proprietary bots,” said Goutam Nadella, EVP of  Symphony Market Solutions. “Our Market Solutions can help alleviate the pain of the most complex, time consuming activities for our customers, while also helping them enhance the services they provide to their own end customers. Symphony customers will be able to install turnkey workflows to automate the completion of RFQs or even resolve a trade break, so that our users can better focus on what they do best: making the strategic decisions that their client depends on.”

All Market Solutions are built, licensed and supported by Symphony. Additionally, as part of the Market Solutions offering, Symphony also provides a wide range of licensable third party applications to enhance and facilitate customer’s digital transformation and workflow automation initiatives.

Symphony Names Mrs. Queenie Chan as Head of APAC to Lead Regional Growth and Development

In her new role as Head of APAC, Queenie Chan, formerly Head of North Asia, will lead Symphony’s expansion in this key region. Symphony is already well-established in the region: it hosts offices in Singapore, Hong Kong and Tokyo and 32% of its users are located across eight key APAC countries including China, Japan, Singapore, Malaysia, the Philippines, Australia, India and Hong Kong. 

“After having spent 15 years in Capital Markets in Asia with banks including CSLA, Barclays and Goldman Sachs, I wanted to join a high growth technology firm. Symphony was definitely the right choice as it has offered me an incredible opportunity to grow myself and the business,” said Chan. “I am very proud and grateful to the global Symphony team, and of our accomplishments to date in Asia.  I can’t wait to embrace wholeheartedly the next opportunities as we introduce Symphony Market Solutions to the market.”

Cash ManagementFinanceSecuritiesTransactional and Investment Banking

What is next for cryptocurrency?

The rise of cryptocurrency is to be seen as a democratising force within the global economy. For example, secured token offering, has emerged as a true competitor to the traditional Initial Public Offering (IPO) for growing businesses. Judging from the growing acceptance of cryptocurrency by countries and companies, it is predicted that institutional investors will move towards secure cryptocurrency investments over the next decade, if not earlier. Ana Bencic, President and Founder of NextHash explores this phenomenon in more detail.

 

Uber Technologies Inc.’s large initial public offering launched in May and the ride-hailing app has run into some trouble. Uber proposed to go public with a $120 billion valuation, to be pitched by financiers at Morgan Stanley and Goldman Sachs ahead of its IPO. Nonetheless, the company eventually listed with a $75.5 billion market cap. The New York Times elucidated that institutional investors, many who privately owned Uber stock, would not purchase additional shares at a higher price. Uber had received in excesses of $10 billion from institutional investors and private equity firms, among other investors, according to the report and many bought their Uber shares at valuations below $61 billion.

 

The ride-hailing giant priced its IPO on Thursday 9th May at $45 a share, raising a minimum of $8.1 billion and putting Uber’s IPO well behind some of the other, large offerings on the U.S. market in recent years. Facebook Inc raised $16 billion its offering in 2012, while Visa Inc. raised close to $18 billion in 2008 and Alibaba Group Holding Ltd. brought in around $25 billion in 2014.

 

Initial Public Offerings can offer companies the prospect to raise new equity capital; to monetise the investments of private shareholders such as corporation founders or private equity investors and to enable simple trading of existing holdings or future capital raising by becoming publicly traded enterprises. 

 

Nevertheless, for companies looking to list, there are potential drawbacks. Foremost, there is the risk that the required funding will not be raised. Additionally, the cost for accounting, marketing and legal professionals to get to the point of an IPO can be sizeable. It might also necessitate a significant amount of time and effort from the management team, potentially disrupting them from their primary task of running the business. Furthermore, as in Uber’s case, there is a. While no promises can be made in these circumstances, many may be looking at the recent state of these tech unicorns (privately held start-up enterprises valued at over $1 billion) such as Uber and even Facebook may have people pondering if the next big thing will follow the same path. 

 

Aside from financial sacrifice, the time and effort to get to the IPO stage and the administration required once a company has gone public or floated, is considerable. For companies at the front-line of technological advancements, time is of the essence. According to Street Directory, an IPO typically takes between six and nine months. In some cases, this procedure can take up to 18 months. For high-growth businesses, this kind of interval may well bump potential unicorns off their path to a £1 billion valuation and present their rivals with a huge advantage. So what other prospects do highly scalable businesses have? 

 

The cryptocurrency market provides distinctive opportunities for businesses in need of access to vital growth finance and for investors desiring access to potential unicorn businesses at an early stage. This is made likely by cryptocurrency platforms’ capacity to operate across borders, an advantage that isn’t possessed by conventional markets.

 

In April, the French parliament permitted a ground-breaking financial sector bill which aims to encourage both cryptocurrency traders and issuers to set up in France. Organisations looking to issue or trade both existing and novel cryptocurrencies will soon have the option to apply for official accreditation.  The scheduled certification process exhibits a degree of official acknowledgement of the cryptocurrency marketplace. Bills like this enable French investors to trade and invest cryptocurrencies, as well as facilitating businesses to be traded as a Secured Token Offering which would give investors, traders, and entrepreneurs a way to trade and exchange tokens for cryptocurrencies, bringing the ecosystem into the cryptocurrency world. In exchange for charging tax, France is laying the foundations for the Europe-wide adoption of cryptocurrency trading.

France is pushing for the European Union to adopt a regulatory framework on cryptocurrencies.

 

There has been a largely positive attitude towards cryptocurrency by several countries. Malta, Slovenia and France are strong examples of those who are encouraging the implementation and use of cryptocurrency for trading and investment. The ability to invest or trade freely and across borders is an attractive prospect for businesses, who are able to receive financial investment from foreign parties.

 

New technologies are allowing businesses that are not in a jurisdiction that has cryptocurrency regulation in place yet to be included in the new, second generation of scaling business investment. 

 

With Brexit on the horizon for the UK, economists are making their forecasts about how the worth of the pound will be affected. Due to the interdependence of the pound and euro, some have claimed that in either of the potential outcomes- there will likely be some loss in value to these traditional forms of currency.  Cryptocurrencies offer an alternative to traditional, fiat currencies for both consumers and companies, due to their unique advantages of being decentralised, transparent and wholly unaffected by the Brexit situation

 

With incongruent regulation and legal frameworks throughout the globe, platforms that empower a corporation or investor in one jurisdiction to trade or exchange tokens or currency with another trader in another country with a different statute could open the doors to potential unicorn companies to thousands of family offices, hedge funds and institutional investors in a matter of years. In the medium term, platforms that give businesses access to global growth finance could help developing countries and the wider global economy grow at a truly competitive rate to their Western counterparts. 

 

CONCLUSION

 

Cryptocurrencies have spent the last few years in a stage of growth and maturation. The emergent importance of blockchain-based cryptocurrencies is easy to grasp today. From the snowballing rate of adoption of Ethereum and Bitcoin by conventional institutions, the instituting of digital-assets trading platforms and the implementation of cryptocurrency-specific legislation by numerous countries both inside and outside of the EU- cryptocurrency is seeing far greater adoption by both institutional and private traders/investors. With the ability to invest in a corporation from anyplace in the world, quicker than by traditional means and with a far greater potential for a swift return on investment, cryptocurrency offers manifold unique and substantial advantages that have fortified it a lasting place in society.

 

 

Cash ManagementTransactional and Investment Banking

Aryaka Raises $50M to Accelerate Global Managed SD-WAN Expansion

Series F, Led by Goldman Sachs, Enables Company to Quickly Grow Revenues, Headcount & Global Footprint

Aryaka®, the global leader in managed SD-WAN, today announced it has closed a $50 million Series F round of funding led by Goldman Sachs Private Capital Investing. This brings Aryaka’s total funding to $184 million. Additionally, it was announced that Matthew Dorr of Goldman Sachs will join Aryaka’s Board of Directors as a Board Member, and Michael Kondoleon will join as an observer. Goldman Sachs will be joining existing investors including Trinity Ventures, Mohr Davidow Ventures, Nexus Venture Partners, InterWest Partners, Presidio Ventures, Third Point Ventures and DTCP.

The funding will be used to scale business operations, grow revenues and hire exceptional talent, as Aryaka continues to see larger deal sizes and global customer expansion.
“We’re constantly evaluating the market for high-growth companies that are leaders in their space. Our research shows that Aryaka offers a compelling solution for the SD-WAN market that continues to grow exponentially including increased adoption of SD-WAN managed services,” said Matthew Dorr, vice president at Goldman Sachs Private Capital Investing. “We decided to invest in Aryaka because of their highly differentiated offering, strong customer base, global footprint and their experienced management team.”

“We are pleased to receive this investment from Goldman Sachs. This new investment allows us to further accelerate our business momentum and endorses our growth strategy,” said Matt Carter, CEO of Aryaka. “We are extremely well positioned to help our customers drive WAN transformation and their multi-cloud and application performance initiatives; all while being delivered ‘as-a-service’.”

In the last twelve months, Aryaka has continued to accelerate business growth, which has resulted in thousands of globally managed sites and significantly larger annual recurring revenue (ARR) streams. The Company has also brought in seasoned members to its leadership team, established new go-to-market partnerships and continued to build out a best-in-class global network of points-of-presence (POPs). These POPs have been supplemented with global Network Operations Centers (NOCs) and 24X7 support.

As multi-cloud requirements have grown, Aryaka has cemented partnerships with the leading public cloud providers including AWS, Microsoft Azure, Google, Oracle and others. These partnerships allow Aryaka to offer the industry’s best managed cloud connectivity options and deliver a true, multi-cloud solution. In addition, through partnerships with Palo Alto Networks, Symantec and Zscaler, Aryaka brings a full-fledged security solution to the edge.
Aryaka’s continued innovation around its orchestration platform, connectivity solutions, edge devices, WAN optimization and security software all combine to form the most integrated solution in the industry. Aryaka is the only SD-WAN platform that has both the technology stack as well as a highly available global network that offers managed services at scale. This platform provides customers a seamless solution and delivers the best possible end-user application experience. Aryaka currently has more than 800 global customers, including JAS Worldwide, HMSHost International, Makinohttps://www.aryaka.com/press/sd-wan-revolutionizes-manufacturing-it/], [Pilot Freight, Element Solutions, Allegis, and City & Guilds Group.

For more on Aryaka, please visit: https://www.aryaka.com/
Visit the Aryaka blog: https://www.aryaka.com/blog/https://www.aryaka.com/blog/
Follow Aryaka on Twitter: @AryakaNetworks
Visit Aryaka on LinkedIn: https://www.linkedin.com/company/aryaka-networks/

Transactional and Investment Banking

GODWIN OPENS LONDON OFFICE IN LINE WITH UK EXPANSION

GODWIN Group, the UK-based property development and investment company, has continued its growth, recently opening a London office to add to its existing bases in Nottingham and Birmingham.

The new London outpost, based in the heart of the capital in prestigious Mayfair, provides a new base of operations for both arms of the business, Godwin Developments and Godwin Capital.

Godwin is already creating links to Greater London, the South East and South West of the UK and further expanding the geographical scope of Godwin Developments’ commercial and residential portfolios.

The new location will also provide important access to London’s financial network and wealth-raising opportunities for Godwin Capital, the investment arm of the business.

Andrew Mitchell, group investment director of Godwin Group, said: “As a leading international financial centre, London is a key location for Godwin Capital to enhance its corporate profile, provide expansion opportunities and access to one of the world’s deepest pools of capital.

 “The build-to-rent (BTR) sector continues to grow apace; operators are looking to take advantage of improved yields and a wider selection of sites across the UK as infrastructures improve and lower land prices make development lucrative.

“Many of the key players in this market are based out of head offices in London. Godwin Group’s new London office is strategically located to provide this vital link, local contact and expertise for its regional businesses.”

The London office launch comes after a number of high-profile new hires at Godwin Group. Staff numbers have increased by 60% as the firm’s growing number of regional projects has expanded.

Recent successes include planning approval for Godwin’s proposed new BTR scheme of 201 apartments at The Landmark development in Derby, Godwin Capital’s launch of innovative new investment products and the launch of the group’s BTR brand called Core Living – which plans to build up to 2,500 new homes over the next four years.

Stephen Pratt, group land director of Godwin Group, said: “Godwin Group has seen huge growth over the past months. Our new London office will allow us to accommodate further expansion plans and look to reach new markets in our key sectors.

“These are exciting times for Godwin Group and we are looking forward to expanding our network even further with the opening of our London office.”

Visit Godwin Group on https://www.godwingroup.co.uk/

Cash ManagementTransactional and Investment Banking

Huq Industries in £1.4m Raise with Equity Investors 24 Haymarket

Huq Industries, the leading geo-behavioural consumer research platform, today announces £1.4M in new funding led by 24 Haymarket. Huq’s real-world consumer research datasets and cloud-based market analysis tools help customers across media, finance, real-estate and retail make informed and effective business decisions. This investment will be used by Huq Industries to support the acquisition of research data for use both in existing markets, and meet to demand for its products internationally.

Conrad Poulson of Huq Industries said:

“This investment enables Huq to accelerate the commercialisation of our platform across our key verticals and geographies. 24 Haymarket together with our existing shareholders provide us with both the funds and the network to support Huq through a very exciting phase of its growth.”

Alex Warren of 24 Haymarket commented:

“In 2018, Huq commercially validated its unique geo-behavioural data with major players in the out-of-home sector. This capital raise will allow Huq to grow its proprietary international data, capitalise on the global out-of-home opportunity, and expand into other large target markets like finance and property. A Chief Commercial Officer has been recruited and the board strengthened to support this growth. Huq is uniquely positioned to capitalise on the growing appreciation of the value of such data amongst a broad and diverse enterprise customer base.”

About Huq Industries

Huq Industries was founded in 2014 by Conrad and Isambard Poulson together with Alexander Fairfax to accurately measure and predict offline consumer trends. Over 90% of retail spend still takes place in the real world. Measuring this behaviour reliably and at scale leads to sought-after insight, but is hard to achieve using conventional methods.

Huq Industries partners with mobile app publishers to collect first-party geo-spatial data from across the globe. This data is then abstracted to identify real-world consumer insight and trends. Huq’s customers and partners include professional investors, leading market research and media agencies alongside some of the world’s largest real-estate owners.

About 24 Haymarket

24 Haymarket is a premium deal-by-deal investment platform focused on high-growth businesses, investing up to £5 million in any particular company. 24 Haymarket’s Investor Network includes several highly-experienced private equity and venture capital investors, seasoned entrepreneurs and senior operators. We invest our own capital in direct alignment with entrepreneurs and typically seek board representation to actively support their growth agenda. Since inception in 2011, 24Haymarket has invested in more than 50 high-growth businesses.

Cash ManagementTransactional and Investment Banking

Understanding and mitigating Bad Debt risks

Bad debt is a sum of owed money which has been outstanding over time and the prospect of it being repaid has diminished, making the debt unrecoverable. This is typically a result of the debtor going into liquidation or administration as they are out of money. As a business owner, you are at high risk of building up bad debt as you will trade with a number of different suppliers and customers, some of which may not have a dependable track record for borrowing, writes Keith Tully of RBR Advisory.

 

In order to protect yourself from bad debt, it’s vital to put measures into place and recognise the warning signs. An accumulation of bad debt can attack working capital, soon having detrimental effects on the financial health of your business. Late paying customers can create cash flow issues by causing a slowdown in income which limits the amount of cash available for the business.

 

A late invoice can easily turn into bad debt if it is left outstanding for a prolonged period of time. By tacking late payment early in the process and putting the correct protections into place, you may have a higher chance at recouping the money. By recognising the warning signs of bad debt, you can mitigate it and guard your business by following a few simple steps:

 

Due diligence

If you hold suspicions that a customer is unserious about making payment, carry out a credit check which is essentially a risk assessment exercise. This will highlight the consumer’s attitude to borrowing, their financial behaviour and whether any legal action has been taken against them. A quick search on Companies House will also show you whether the business is solvent, a basic indicator that the business has cash available.

 

In some cases, word of mouth can give you a true opinion of the business you are dealing with. Social media is an easily accessible platform which houses reviews directly from consumers. Carry out a quick search on social media to read what others are saying about them, both positive and negative. This will give you a taste of the character of the company through the click of a button.

 

Deposit, interest and penalties

In order to ensure that your time and labour proves worthwhile and profitable, ensure that you request for a deposit to be made which demonstrates financial commitment. If the payment falls into the bad debt category, this will only apply to a fraction of the overall funds as the remaining would have been paid as a deposit which protects your business to an extent.

 

In the event of missed payments, consequences should be made clear early in the process to prevent outstanding payments from maturing into bad debt. This could include adding interest or a penalty to penalise the business from missing payments. If the business is experiencing financial difficulties, this may prompt them to communicate their financial status.

 

Payment reminders

Scheduling a series of payment reminders is one of the first steps you can take to mitigate bad debt. By prompting for payment ahead of the due date, the business will be aware of the upcoming payment. Displaying clear payment information on each invoice will also make it easy to make payment as the information will be readily available. Scheduling frequent reminders after the payment date has passed can help flag up the outstanding invoice and it may just be as simple as a reminder that is required for payment to be made.

 

 

 

 

 

Debt distribution

Distributing the risk of bad debt by spreading your client base can prove beneficial in the long term. As a small business, winning a contract with a large enterprise is an achievement, both financially and in reputation. However, if your business takes the risk of becoming dependable on service solely from the large business, you fall into the trap of failing to spread your business proportionally. If the bigger business fails to make payment on time or becomes insolvent, you run the risk of cutting off your only stream of income, pushing your own business into decline.

 

Selected larger institutions are notorious for making late payments to smaller suppliers, a topic which was high on the agenda during the Spring Statement. Following a clamp down on late payments, the Chancellor proposed that auditors of listed companies should report on the performance of late payments in annual reports. The role of the Small Business Commissioner was also established in 2017 to ensure fair payment to Britain’s small businesses and resolving payment disputes for smaller businesses.

 

For example, in the event of Carillion, many small businesses were forced to liquidate as a result of late payments from Carillion. Following the demise of the construction firm, the business owed thousands of businesses and was known to breed a late payment culture in which smaller suppliers were a non-priority.

 

Statutory Demand

A statutory demand is a formal action which is taken to request for payment from a company, this is issued before a winding up petition. The statutory demand gives the debtor 21 days to make payment or reach an agreement. If the debtor fails to fulfil the statutory demand, you are able to request to wind up their company in an attempt to compensate for the bad debt.

 

Winding up petition

As a final and more pressing resort, taking legal action can speed up the process of retrieving owed money. If standard methods of recovery have failed, this may be an effective option which can help set your business back on track. A winding up petition is a court order taken out against the debtor. If granted by the court, they will call for the compulsory liquidation of the business unless the amount owed can be realistically repaid or terms renegotiated. This is a costly and lengthy process so if you are able to settle the manner out of court, it could protect your business from incurring court fees.

 

Understanding and mitigating bad debt can protect your business from having to write off debt when in reality it can be recovered. Bad debt can bite a large chunk out of your working capital, restricting investment activity and posing financial hurdles which could hinder the business from prospering.

 

RBR Advisory

https://www.realbusinessrescue.co.uk/advisory

 

Transactional and Investment Banking

SUN GLOBAL INVESTMENTS ACTS AS SOLE ARRANGER FOR RUPEES 10 BILLION MASALA BOND LISTING FOR INDIA’S HDFC LIMITED

Sun Global Investments, an international financial services firm based in London with specialism in the emerging markets, acted as the Sole Arranger for a new Rupees 10 Billion (around USD 150 Million) 3 year Masala Bond for India’s Housing Development Finance Corporation Limited (“HDFC”).

The bonds were priced at a yield of 8.22% annually.

The issuance is part of HDFC’s US$ 2.8bn Medium Term Notes Programme listed on the International Securities Market of the London Stock Exchange.

A masala bond is a rupee-denominated bond issued to overseas investors. The bonds are settled in US Dollars.

Speaking about the Masala Bond issuance, Mihir Kapadia, the CEO of Sun Global Investments said, “This is another benchmark Masala Bond placing, continuing our association with India’s financial institutions to allow global investors the ability to access high quality Indian credit.”

Commenting on the transaction, Ajay Marwaha and Arjun Kapur, responsible for providing Capital Markets and Corporate Finance advice said, “There is an increasing awareness and interest amongst international institutional investors in issuances from Indian corporates.

The London Stock Exchange has become a global home for Masala Bonds with a strong track record of supporting rupee denominated bonds to fund India’s rapidly growing economy.

Sun Global Investments focuses on providing investment banking and capital markets solutions to corporates from Emerging Markets, as well as helping international investors access opportunities in those markets.

HDFC is one of the largest providers of mortgages in India. It was established in 1977 and was the first specialised Mortgage Company in India. It is a financial conglomerate with interests beyond the mortgage market.

Transactional and Investment Banking

Why Are Investor Relations So Important?

Sometimes overlooked by smaller funds and companies, there has been a surge in focus on investor relations, the investment equivalent of customer service, in recent years, with many businesses now dedicated entire websites, job roles and even departments to the practice. Staff Writer Hannah Stevenson discusses the importance of good investor relations in today’s financial market.

Following the implementation of GDPR, consumers, investors and businesses around the world are becoming increasingly aware of every communication they receive from a company.

As such, compliance, in all its forms, is now even more important to businesses than ever before, and in the financial and investment space this is as vital as it always has been, if not more so. Whilst it has always been crucial to success in the investment market, now compliance, and assuring investors of compliance, has been bought to the fore.

For example, the recent announcement that the UK Government is suspending its Tier-One Investment Visa Programme, with a view to making important changes to this to combat the risk of money laundering. Bruno L’ecuyer, Chief Executive Officer of the Investment Migration Council, made the below comment on the changes and how these would affect investors.

“The UK government may not have much influence with the European Parliament these days, but it has provided an object lesson in how to manage investor migration sensibly and for the benefit of its citizens.

“According to reports, potential investors will have to agree to undergoing a thorough audit of their financial assets, proving they have control of the required capital for at least two years, and will require audits to be undertaken by suitably regulated UK firms.

“Most notably, it appears the UK government recognises the value of investment migration and desires any investment made by individuals to have a greater impact on the UK economy, which is why it is apparently looking at scrapping its own government bond option in favour of directing investment into active and trading UK companies.”

As Bruno highlights, the importance of audits and transparency in this space is as vital as ever, and firms need to be able to prove to both their investors and the authorities that they are acting properly and are fully compliant with all relevant regulations to ensure their continued success.

This is why investor relations have, over recent years, become a vital aspect of any company, fund or asset manager. Many multinational companies, such as Hitachi, Etsy and the Coca Cola Company all operate their own investor relations departments, showcasing the increasing focus companies are putting on the role.

After all, as client satisfaction and feedback become buzzwords within the corporate space, it makes sense that investor relations should also increase in importance, and many companies and investors are now embracing this side of their business. Through strong communication and specialist support, companies, investors and fund managers can ensure that their investors remain on-side and that they understand that their money is in safe hands.

FX and PaymentTransactional and Investment Banking

Cryptocurrency: What it means for divorcing couples.

Bitcoin is known as the “gold standard” of cryptocurrency. Chances are you’ve heard of it but may not really understand its importance and growing relevance. In recent years, however, banks, governments and crucially divorce lawyers are beginning to take a much more forensic interest. And if you own bitcoin or have a spouse that does and you’re heading to the divorce courts, it’s essential that your lawyers not only understand this very new type of asset but are familiar with tracing it and valuing it.

 

So, what is Cryptocurrency? 

 

Essentially cryptocurrency is a virtual currency which has no physical form as it exists only in the online network, that network is completely decentralised so there is no third party bank or government that the currency has to go through, instead, the technology allows users to send bitcoin directly to another person (this allows users to be pseudo-anonymous as details that a bank would usually want to verify identity are not required).  The details of the transaction are encrypted, and the transactions are then bundled into and recorded on a “blockchain” the details of which cannot then be changed by anything or anyone and are based purely on a mathematical algorithm.   

 

Why do divorcing couples and lawyers need to know about it?

 

Just as with cash in the bank or property, cryptocurrency is an asset which the court will have the power to distribute within the divorce case. It follows, therefore, that a holding must be disclosed within the proceedings as both parties are under a duty to provide full and frank disclosure of all their assets at the outset of the case and ongoing. However, for as long as there have been divorces, there have been parties who try to hide assets. 

 

The courts are certainly used to this kind of bad behaviour and have a number of powers at its disposal to deal with offenders. However, bitcoin is a very new type of technology, established only in 2009 and, therefore, is only recently starting to appear in divorce proceedings. Divorce lawyers and the courts are having to learn a whole new language for dealing with this new technology. 

 

Tracing cryptocurrency. 

 

The first most important step is to establish that cryptocurrency exists. If it is disclosed by the owner, then all well and good. However, cryptocurrency, by its very nature, is pseudo-anonymous and, because it is unregulated, it is much harder to trace. It is, therefore, much easier for a spouse to either hide the existence of cryptocurrency or the value of their holding than with other kinds of asset.

 

In order to establish the existence or ownership of cryptocurrency, a search needs to be made of money entering the digital arena. It is much easier to trace cryptocurrencies that are traded via an online exchange and bought with funds from a bank account as that initial transaction can be relatively easily identified. If found that would give a party a strong basis to argue that their spouse owns cryptocurrency and that further investigations should be ordered by the court. 

 

However, once within the digital arena it is much more difficult to trace where the money goes next, or if the initial purchase was made directly. If then moved offline, for example if a person transfers their digital wallet containing their holding onto a USB stick, tracing becomes virtually impossible. 

 

A digital forensics expert will almost certainly be necessary. They can be instructed to search the alleged holder’s computer and email to try and find the relevant purchase transactions and trace the wallet where the cryptocurrency is held. A court order giving permission for this will be necessary and would likely be ordered if there is sufficient evidence (in the form of the initial transaction) or perhaps reasonable suspicion that cryptocurrency exists. 

 

A word of warning however. Care should be taken not to spend more money on hiring professionals to search for the cryptocurrency than what it is worth. Of course, one will not necessarily know how much a holding might be worth until they find it, a very difficult catch 22 situation but one that needs to be considered regularly. A good divorce lawyer will be able to guide a client on this. 

 

What is cryptocurrency worth?

 

This is perhaps the most difficult question to answer. As with stocks and shares, the valuation can change throughout the divorce process, but with cryptocurrency the market is much more volatile. The value of cryptocurrency is liable to change drastically throughout the divorce proceedings; a spouse with a substantial bitcoin holding at the start of the divorce process might have diminished considerably by the time of final hearing or settlement. It will be imperative, therefore, to obtain a valuation at every stage of the process and prior to any settlement negotiations so that the parties know what they are dealing with

 

 

 Dr Stephen Castell, commented:

‘Given the high volatility of cryptocurrency prices, and the possibility of compromise, and even theft, if the holding in question is retained only within a centralized exchange (there have been several high-profile instances of compromised cryptocurrency exchanges, and/or such exchanges going bust), the divorce lawyer may decide to seek from the court an order to sell the cryptocurrency at an early point in the proceedings, or, alternatively, to do this, as a matter of prudent protection of asset value, by mutual agreement between the parties.  This could remove uncertainty and volatility and fix and secure the value of a cryptocurrency holding in more reliable, more liquid, currencies, such as USD or GBP, to be placed in an escrow bank account pending resolution of the divorce proceedings.’

 

However, whilst the courts retain their discretionary powers to redistribute assets on divorce in accordance with the section 25 factors it is unclear what powers the court will have to actually redistribute cryptocurrency holdings themselves if they exist only in the network and if there are difficulties with realising their value. As this is new technology and as yet there are no reported cases dealing with these assets giving practitioners guidance on how to advise clients, it is clear we are entering a brave new world. Added to that the fact that there is no regulation it raises questions as to how any Order for Transfer or Sale could be enforced. 

 

Nonetheless, cryptocurrency is here to stay, and the author predicts that this type of asset will become more prevalent as time moves on and the language that lawyers use, and the powers of the courts, will evolve with it. 

 

A City Law Firm recognise digital assets are a valuable commodity that needs addressing in Wills; business transfers and as discussed during divorces. We understand not every divorce financial arrangement is clear cut, so we do get to understand the issues in detail as the landscape changes we are there to move with it 

Karen Holden is the Founder of A City Law Firm

digital tax
FinanceFundsTaxTransactional and Investment Banking

The importance of Making Tax Digital to the UK mid-market

The importance of Making Tax Digital to the UK mid-market

Written by Steve Lane, CTO at Access Group

With UK Government’s Making Tax Digital (MTD) deadline less than two months away, the race is on for UK organisations to understand the impact of MTD on their business. MTD could mean a significant shift in operations for some organisations, which means they need to act now in order to get themselves in order for the impending deadline.  


What MTD requires

The Making Tax Digital programme will require UK businesses with annual turnovers above the VAT threshold of £85,000 to keep digital records for VAT and submit their returns digitally. The points-based penalty system means business taxpayers gather points with each late submission of an MTD report, those with multiple businesses must submit tax reports for each of their businesses. To ease the transition process, HMRC is allowing the use of ‘bridging software’ to support the digitised submission and account information retrieval from spreadsheets. However, those without it in place risk not being able to carry out their business as usual.

While all respondents in Access Group’s survey use some type of electronic system for financial management, 96 percent of mid-market businesses still process a portion of their tax returns manually, for example performing off-system calculations, which could be problematic come 1st April if businesses fail to use bridging software to support the digital submission of their VAT returns. Which begs the question, why do some organisations still rely heavily on manually calculating? A large proportion of the finance professionals surveyed explained that they haven’t transitioned to 100 percent digital processes due to a lack of knowledge and training (26 percent) while others said it’s the fact that multiple legal entities are involved in VAT registration (23 percent).


Putting off MTD is no longer an option

Manually entering VAT is inefficient and opens businesses up to human error. Under the new regulations, mid-market businesses could stand to lose not only money in fines, but credibility within their field. Putting off making the necessary technical changes to your business is no longer an option.  

There are certain things that businesses simply cannot afford to ignore, for instance:  


Transformation

Deploying new business software isn’t always an easy decision. Especially when there are multiple ways to ensure your organisation remains compliant with government regulations. Considerations need to be made for either full business software transformation or a single solution update i.e. bridging software, to support. Given the impending deadline, businesses must act now, to ensure they’ve put in place measures that abide by the regulations.


Accreditations

When deciding to begin a digital transformation project, particularly with digitising financial systems, choosing a partner that has the proper government accreditations is vital. Acronyms like ISO or IL are ones to look out for.


Productivity

Digitising financial systems offers the business not only a more efficient, and free of human error way of working, but a more productive way as well. Entrusting admin-heavy tasks to intelligent software can free up time elsewhere to focus on innovation, business development and growth ambitions.

Whilst it’s important that businesses’ financial systems are all set for the 1st of April deadline, to think about Making Tax Digital solely in terms of tax compliance would be to miss the point. It’s the perfect opportunity for UK business’ senior management teams to take a broader perspective – one that turns this regulatory burden to the business’ advantage. The organisations who act now are the ones who will see greater efficiency and productivity, driving both business growth and profitability. It’s good practice to update your operational processes at any moment in time, the MTD deadline provides a good excuse for companies to do just that. Given the pressures coming from Government organisations to digitise and the complexities that go into technology investment, mid-market businesses need to ensure their finance teams’ house is in order to remain compliant and avoid fines in the new era of digital tax.

Corporate Finance and M&A/DealsSustainable FinanceTransactional and Investment Banking

The growth of the wind energy sector both in the UK and abroad

Greener initiatives are being utilised more and more across the globe, as Earth’s citizens try to safeguard the planet’s resources. We may have relied a lot on fossil fuels like gas and coal in the past, but due to these sources not being sustainable we’re now ambitious about developing practices which are more environmentally friendly.

The market for renewable energy now includes everything from wind turbines to wave power. Wind power is proving particularly popular, with the amount of energy generated across windfarms in just 2016 found to have exceeded the amount created via coal power plants in the UK for the first time ever. In fact, over 40 per cent of all the energy generated on Christmas Day 2016 was as a result of renewable sources and 75 per cent of that sum was from wind turbines.

As coal-fuelled electricity has dipped to its lowest output for 80 years, the future certainly looks bright for the renewables market and, in particular, the wind energy sector. Join joint integrity software experts HTL Group as they explore just how much potential this industry holds…

What we can expect in the near future

The wind energy sector had to reconsolidate record-breaking growth for the years between 2014 and 2016. In total, the global installed capacity at the end of 2016 was 486,790 MW — an impressive figure by anyone’s standards.

Growth is expected to pick-up once more in the years ahead though. In fact, there are predictions which expects the global installed capacity to rise to 546,100 MW. This year, this figure was anticipated to hit 607,000 MW before reaching 817,000 MW by 2021. Although the rate of growth is anticipated to slow, it’s clear that wind power will continue to occupy a large energy share on a global scale.

How is each area of the world performing? Asia, North America and Europe are expected to remain the dominant wind power markets. By 2021, it’s anticipated that Asia will create 357,100 GW of energy from wind turbines. Europe is expected to hit 234,800 GW, while North America is likely to generate 159,100 GW.

What’s more, emerging markets are predicted to continue their development. For example, Latin America will grow to 40,200 GW by 2021 — up from 15,300 GW in 2016 — while the Middle East and Africa will more than quadruple their output, growing from 3,900 GW in 2016 to 16,100 GW in 2021.

Investments to expect in the years ahead

Additional investments will obviously be required in order for the sector’s continued growth to be supported. In 2016, €43 billion was spent across Europe on constructing new wind farms, refinancing, fundraising and project acquisitions — an increase of €8 billion compared to 2015.

Offshore windfarms appear to be getting more attention than sites found onshore. Investments onshore dropped by 5%, while offshore reached a record-breaking €18.2 billion. Impressively, the UK is leading the way, raising €12.7 billion for new wind energy projects. This more than overshadows the country in second place, Germany, with €5.3 billion.

The total investment may be lower then. However, it’s clear that wind energy will remain vital to the global movement towards greener, more sustainable energy both now and in the future.

Cash ManagementRisk ManagementTransactional and Investment Banking

Tail expands portfolio driven by significant investment

Tail Offers Ltd is pleased to announce that Quantum Financial Holdings, a Fintech and security investment Group, has made an investment of £500,000 into the business. In addition to the financial investment Quantum has made, Tail will benefit from a suite of backoffice, infrastructure and value-added functions provided by the Quantum Group which will accelerate Tail’s significant growth to date.

“I am delighted to have been able to secure a deal with Tail which will enable them to invest in critical systems and further develop their amazing offering, driven by their exceptionally talented team,” says Floyd Woodrow, Chairman of Quantum Financial Holdings. “As well as financial investment, Quantum prides itself on bringing additional value to those companies we have an involvement in, through expertise and the streamlining of business support functions which free up key drivers in Fintech organisations to do what they do best – innovate.” 

“Open Banking will change the way consumers and retailers interact and we want to be at the forefront of facilitating that change,” says Philipp Keller, CEO of Tail Offers Ltd. “We are already focused on expanding our offering to a national audience and this will be accelerated through Quantum’s involvement.” 

“As our offer portfolio expands, we will continue to deliver a readymade white label rewards solution to corporate and financial institutions which will, in turn, enhance their own customer propositions. We are excited to embark on the next step of our journey with a partner that not only provides us with capital but, more importantly, with the right network and infrastructure to use it effectively,” Keller concludes. 

Part of the inaugural Tech Nation Fintech programme, Tail is one of the leading cashback solution providers for Open Banking. Already available for Monzo and Starling customers, its most recent addition includes Volopa, a London-based card provider active in the corporate and private banking sector. 

The Tail app integrates directly with a user’s bank account to provide tailored, high-value offers and cashback rewards in the most convenient way possible. Via its industry-first, cashback, self-serve platform, Tail enables hyperlocal, local and national merchants to use a tailored, data-driven rewards solution to engage directly with customers. 

For further information, please email [email protected] 

BankingFinanceTransactional and Investment Banking

Investors prefer ‘disruptive’ start-ups, but give them less money

Entrepreneurs pitching ‘disruptive’ start-ups are 22% more likely to get funding, but receive 24% less investment than less risky ventures, according to new research from Rotterdam School of Management, Erasmus University (RSM).

A disruptive start-up, breaking away from existing products, services and business models, can potentially bring colossal returns for investors. But these ventures are also risky, with a considerable possibility of failure, says Timo van Balen, a researcher at RSM.

Timo analysed data of 918 start-ups from Start-Up Nation Central, a private non-profit organisation that has collected data on all Israeli start-ups since 2013. He compared the characteristics of each profile’s vision statement, aimed at investors, with how much funding the venture secured.

Alongside fellow researchers, Murat Tarakci of RSM and Ashish Sood of the University of California Riverside, he discovered that increasing the communication of a start-up’s disruptive vision improved the odds of receiving funding by an average of 22%. But it cut the amount invested by an average of 24%. This amounted to $87,000 less in the first investment round and $361,000 less in the second investment round.

Timo says: “Entrepreneurs increasingly talk about ‘disruption’, framing their products, technologies and ventures in this way to secure financial capital. We found that emphasising this image of a venture’s potential market disruption does increase the odds of receiving first-round funding. This is because the promise of being a ‘game-changer’ fosters investors’ expectations of extraordinary returns on their money. However, a highly disruptive venture’s future success is often uncertain, which deters investors from making large speculative investments into it.”

The research suggests that entrepreneurs can craft the communication of their vision to help achieve their funding goals.

Timo says: “Despite the temptation to pitch a venture as disruptive, entrepreneurs should be judicious with the ways they attempt to secure funding. If getting an investment of any size is very important, pitching a highly disruptive vision might be key to grabbing the right people’s attention. But if it’s more important to attract bigger investments, it might be smart to avoid communicating a disruptive vision of the effect of your start-up.”

Cash ManagementForeign Direct InvestmentPrivate FundsStock MarketsTransactional and Investment Banking

Can You Predict The Future Price of Bitcoin?

You can’t spend five minutes reading about cryptocurrencies without stumbling across at least one prediction for the future price of Bitcoin.

Across forums, social media, newsletters, blogs, news sites and every other corner of the internet — financial analysts, expert investors, bankers, tech icons, and new enthusiasts offer up their views.

Some cite careful analysis, some base it on past trends. While others are guessing or acting on their ‘intuition.’ Their predictions are varied, ranging from a plummet to zero, to millions.

With all this noise surrounding the Bitcoin price, you might be wondering whom to believe. Or if you should believe anyone at all. Is it possible to predict the future?

Investing begins with education, not buying. So it’s important to think about the information you base your buying decisions on.

How do people make price predictions?

There are two types of analysis used for predictions: fundamental and technical.

They’re used for everything from the stock market to Bitcoin. While other types of analysis do exist, these are the main ones.

Fundamental analysis

Fundamental analysis is all about intrinsic value. You look at the factors that give something value, then decide if it’s under or overvalued. Publicly traded companies release lots of information to help with this. So, for a stock you might look at a company’s:

  • Revenue (how much money it’s making)
  • Profit margins (how much of the revenue is profit)
  • Growth potential (how much money it could make in the future)
  • Management (how competent the people in charge are)

Some of these factors can be defined in numbers. Others come down to the judgement of the analyst.

For a cryptocurrency, you might look at its:

  • Price growth (how the price has grown over time)
  • Scalability (if it has the potential to keep growing)
  • Security (if the network is secure and safe from attacks

​Technical analysis

Technical analysis is different as it focuses on an asset’s price, not the asset itself. Maybe you’ve heard the phrase ‘past performance is not an indicator of future performance.’ But technical analysis bases future predictions on the past. This can be based on a short time frame (hours or even minutes) or long (months or years.)

To do this, you look for patterns and trends in price charts, such as:

  • The average price over a chosen time span
  • The price at which a lot of investors start buying
  • The price at which a lot of investors start selling
  • The overall price trend

Do fundamental and technical analyses work?

There’s no straightforward answer to that question. Both techniques can be useful, but they also have their limitations for cryptocurrencies.

Fundamental analysis works when investors base their decisions on fundamentals. This isn’t always the case for Bitcoin. Many investors base their decisions on the decisions they expect others to make.

Technical analysis assumes that a market follows rational rules and patterns. It’s less useful for cryptocurrencies because the market is still young. There isn’t as much past data to analyse. Cryptocurrencies also have less liquidity than something like stocks.

Self-defeating and self-fulfilling prophecies

When we talk about price predictions, we run into an important concept: self-defeating and self-fulfilling prophecies.

Making a prediction about the future can end up changing what actually happens.

The prediction about the future creates the future.

This isn’t the case when we talk about a system like the weather because we can’t change it.

But when you make predictions for a system involving people, it’s different.

Hearing predictions can cause people to change their behaviour.

Sometimes this happens in a way that prevents the prediction from coming true — a self-defeating prophecy — or it can cause the prediction to come true — a self-fulfilling prophecy.

Predictions about cryptocurrency prices have the power to influence how investors act. If it’s predicted the Bitcoin price will increase, this encourages more people to buy. This can drive up the price, and vice versa.

That brings us to incentives.

The issue of intentions

Incentives are what motivate people to do what they do. It’s an important concept in investing. Financial gain is a powerful driving force.

Most investors understandably want to do whatever will make them the most money. This can include making predictions that benefit them.

Let’s say you come across an article where the author claims Bitcoin will be worth $100,000 by December 1st 2019. Rather than taking that at face value, it’s important to ask: why are they saying this? If they know for certain, why don’t they put all their money into Bitcoin, and make a huge profit? Why are they sharing that information?

Likewise, if someone claims Bitcoin will drop, you might wonder why they’re saying that. If they know for certain, why don’t they keep quiet, short it, and make a big profit?

In both cases, we need to consider the underlying incentives.

If someone stands to profit from the Bitcoin price increasing, it’s natural they’ll predict it’s going to do that. They’re hoping this will turn into a self-fulfilling prophecy. If someone stands to benefit from it decreasing or to suffer if it increases, it’s not unexpected that they’ll predict it’s going to decrease.

Luck and probability

But if no one can predict the future, how come some people do make correct predictions?

Maybe you heard that your brother’s roommate’s cousin’s coworker’s uncle correctly predicted the price of Bitcoin. Or you’ve seen someone on Youtube who seems to always get it right.

The fact that no one can predict the future doesn’t mean no one can make correct predictions.

It comes down to luck, probabilities, and information asymmetries.

First, luck. Every day, thousands of people make predictions about Bitcoin prices. It’s inevitable that some of them will be correct by luck.

As they say, even a stopped clock is right twice a day. With so many people making predictions, it’s likely a percentage of them will be correct.

When professional forecasters make predictions, they usually base them on probabilities. What’s the most likely outcome? A weather forecaster might say it’s going to rain tomorrow because there’s a 62% probability. They don’t know it for sure. It’s just more likely than not.

Then there’s insider information. If you know something most investors don’t, you have a big advantage. For example, if you have insider information that Apple is about to release a new product, it’s reasonable to expect the stock will go up. But other investors buying Apple stock aren’t aware of that information, so they can’t predict it.

Insider information is less meaningful for cryptocurrencies. There’s a less direct link between fundamentals and prices. Events that seem like they should cause an increase or decrease can do the opposite or nothing.

Conclusion

The next time you look at a cryptocurrency price chart, imagine a crowd of people in a stadium, all moving at different times but appearing to create an organised rippling motion. Because that’s what you’re seeing: the combined actions of many people.

There’s no mystical, secret order to it. There’s just lots of people making decisions based on the information they receive.

MarketsTransactional and Investment Banking

Luxury lifestyle title Tempus Magazine joins new publisher Vantage Media Group

Tempus will be the flagship title of newly formed publishing and content agency Vantage Media Group

Luxury lifestyle title Tempus has been acquired by newly formed Mayfair-based publisher and content agency Vantage Media Group, marking a new phase of growth for the award-nominated publication. Tempus undertook an extensive rebrand in 2017, transforming from a niche watch title to a coffee table book-style magazine specialising in luxury lifestyle and supported by the UK’s first dedicated daily luxury news website, tempusmagazine.co.uk.

Vantage Media Group will see core members of the brand’s editorial and events team continue to grow Tempus through 2019, while also offering its expertise to Vantage’s clients via contract publishing projects, digital content creation and luxury brand events.

“Team Tempus is delighted to join Vantage Media Group and launch this new company,” said editor Rachel Ingram. “It’s an exciting opportunity not just to continue creating this quality magazine for the luxury sector, but also to steer the creative vision of Vantage Media Group from the very beginning. We look forward to bringing our team’s expertise to our present and future clients.”

The move follows months of negotiation, with the deal closing just weeks after the publishing industry’s prestigious annual BSME Awards at which Tempus received two nominations – for Editor of the Year and Art Editor of the Year in the independent category – for the first time in its history.

“We’re delighted to have Tempus Magazine and its talented team on board to head up the launch of Vantage Media Group,” said chairman Floyd Woodrow. “We look forward to working on a range of projects that will benefit from their expert knowledge, rich industry contacts, attention to detail and creative flair.”

As part of Vantage Media Group’s portfolio, Tempus Magazine will publish six issues in 2019, starting with its annual Travel Edition in late January.

“It’s been a challenging year for the publishing industry as a whole but we’re confident that there is extraordinary potential in bespoke content creation, particularly in the luxury sector,” said Ingram. “With the support of our new parent company, Tempus will be able to maintain the exceptional quality of its print and digital products, while continuing to push the boundaries of our expert editorial focus.” https://www.tempusmagazine.co.uk/

FundsGlobal ComplianceTransactional and Investment Banking

The rise of renewable energy

You can’t deny that businesses around the world have taken a greater focus on sustainability — and although this has been damaging for some companies, it has been a great shift for others. One prime example of this is the renewable energy sector; while traditional energy markets are faltering and facing a challenging road ahead, the renewables sector is breaking records.

Although a lot of markets rely on natural resources to operate, the renewables industry use resources that naturally replenish. Collected under the umbrella term of renewables is solar, wind and wave power, alongside biomass and biofuels.

As the market continues to grow, HTL Group, specialists in controlled bolting for the wind energy sector, analyses where the renewables sector is at now:

The market’s performance

The recent years have been successful for the renewables sector. In 2016, 138 gigawatts (GW) of renewable capacity was created, showing an 8% increase on 2015, when 128 GW was added.

Occupying 55% market share and using 138 GW of power, the renewable energy sector is in the lead. Following in second place, coal created 54 GW of power-generating capacity, while gas created 37 GW and nuclear created 10 GW.

Renewables’ huge contribution to the global power-generating capacity accounted for 55% of 2016’s electricity generation capacity and 17% of the total global power capacity, increasing from 15% in 2015.

Research released by the UNEP highlighted that the renewable sector prevented 1.7 billion tonnes of CO2 in 2016 alone. Based on the 39.9 billion tonnes of CO2 that was released in 2016, the figure would have been 4% higher without the availability of renewable energy sources.

Renewable market investment

Regardless of the continued growth of the sector, investments actually decreased in 2016. In 2016, $242 billion was invested in the sector, showing a 23% decrease on 2015’s figures. This reduction can largely be attributed to the falling cost of technology in each sector.

However, this could be down to the alterations made to markets on a country-specific basis. In 2016, Europe was the only region to see an increase in investment in the renewables sector, rising 3% on 2015’s figures to reach $60 billion. This performance is largely driven by the region’s offshore wind projects, which accounted for $26 billion of the total, increasing by over 50% on 2015’s figures.

Across Norway, Sweden, Denmark and Belgium, investment seems to be strong. UK investment slipped by 1% on the previous year, while Germany’s investment dropped by 14%.

Believe it or not, investments made from China decreased from 2015’s $78 billion to $37 billion. Investment from developing nations also dropped in 2016 to a total of $117 billion, down from $167 billion in 2015. In 2016, investment had almost levelled out between developed and developing countries ($125 billion vs $117 billion).

What does the future look like?

With greater developments, the future looks bright for the renewable sector. From the falling cost of technology to societal shifts like the 2040 ban to prevent the sale of new petrol- and diesel-fuelled cars, the future certainly looks positive for the sector — even if investment has declined in the past year.

In the future, it is inevitable that the sector will overtake more traditional markets on a global scale, revolutionising how we generate and consume energy.

This article was provided by HTL Group, hydraulic torque wrench suppliers.

ArticlesTransactional and Investment Banking

The rise of ‘quantamental’ investing: where man and machine meet

Asset managers adopt new approach in era defined by automation, algorithms and big data

As soon as the financial crisis started to recede, Jordi Visser knew something had to change. Algorithms were starting to rule markets, and hedge funds like the one he managed were confronting a tougher era. 

So Mr Visser, chief investment officer of Weiss Multi-Strategy Advisers, started to rethink how the $1.7bn hedge fund could survive in a less hospitable environment. The solution was to evolve and meld man and machine. “We are competing against computers these days, so we had to become more efficient,” Mr Visser said. Mr Visser and Weiss are not the only ones making some adjustments— with varying degrees of gusto — to a new investing era defined more by automation, algorithms and big data.

Analysts have dubbed marrying quantitative and fundamental investing “quantamental”, an admittedly ugly phrase, but one that many think will define the future of the asset management industry. These initiatives are proliferating across the investing world, from small boutiques to sprawling asset management empires. In January, JPMorgan’s $1.7tn investment arm set up a new data lab in its “intelligent digital solutions” division to try to improve its portfolio managers, rather than replace them entirely with algorithms. “It augments existing expertise. We don’t just . . . try to come up with strategies out of thin air,” said Ravit Mandell, JPMorgan Asset Management’s chief data scientist. “There’s stuff that happens in the human brain that is so hard to replicate.”

The 18-strong unit focuses on everything from automating and improving humdrum tasks such as pitch books and digital tools for customers, to more high-end demands such as product creation and improving JPMorgan’s investing prowess. The data unit has already used a form of artificial intelligence known as a neural network to analyse years of corporate earnings call transcripts to identify which words are particularly sensitive for markets, or might augur trouble.

That frequent uses of “great” and “congratulations” are generally good for a stock price, and talk of debt covenants and inventory overhangs are bad, might be obvious to any human fund manager, but they can only listen to or read a limited number of transcripts. A machine can scour thousands.
JPMorgan Asset Management’s data scientists are creating an alert system that will ping its portfolio managers whenever transcripts are particularly positive or negative, and voice analytics that mean they can even detect worrying signals in someone’s intonation.

Some investment groups are starting to use technology to spot well-known behavioural biases. For example, Essentia Analytics crunches individual trading data and looks for common foibles, such as fund managers’ tendency to over-trade when on a losing streak, or hang on to poor investments for too long to avoid crystallising losses. When that happens, fund managers get sent an automated but personalised email signed “your future self” reminding them to be aware of these pitfalls.

“A computer can remind you to follow your own process,” said Clare Flynn Levy, Essentia’s founder. “It’s like a little light on your car dashboard flickering to remind you you’re running out of oil.” Weiss’s chief data scientist Charles Crow has built something similar for the hedge fund: a digital “baseball card” system that analyses and ranks its portfolio managers according to 17 parameters, such as stale positions or movements in correlations, and alerts them to any issues.
In parallel, Weiss’s top managers have a dashboard to allocate money to various teams, showing which ones are good at timing, but poorer at portfolio construction, or are expert stockpickers but have sectoral biases. This helps Mr Visser monitor for hints of crowded trades. There are plenty of “quantamental” sceptics. Many pure quants are doubtful that traditional asset managers can master anything but the rudimentary, commoditised parts of their craft. Meanwhile, many traditional investors argue that it is an overhyped fad that is feeding shorttermism.

Recommended 

Even fans admit that the cultural shift needed to fully embrace these new techniques by largely middle-aged investors is so significant that it could take years before the full potential of “quantamental” investing is realised.

“Behavioural change is the hardest part,” said Ms Flynn Levy, herself a former money manager. “I think an entire generation of fund managers have to age out of the industry before we really see big changes.”

Nonetheless, few money management executives doubt that technology will play an everincreasing role, and many are hopeful about the potential to invigorate the industry’s often patchy investment results.

For example, it appears to have helped Weiss last month, when many hedge funds were clobbered after having been sucked into technology stocks. Mr Visser declined to comment on performance, but an investor document seen by the Financial Times indicates that Weiss’s main fund sidestepped most of October’s torrid markets, and is up 6.3 per cent so far this year.

Mr Visser admitted that not all the hedge fund’s portfolio managers were thrilled at the new measurements, tools and expectations, but argued that the quantitative tools were fair, objective and necessary. “They either want to get better and embrace it, or they fight it,” he said. “But it’s a case of adapt or die.”

Copyright The Financial Times Limited 2018. All rights reserved 

Bond Investment
Transactional and Investment Banking

Bonds remain firm fixture in portfolios moving into 2019

Bonds remain firm fixture in portfolios moving into 2019

  • Nearly three quarters of advisers are either looking to write more bond business in the next year 
  • The majority of financial advisers (55%) believe onshore bonds play an important role in the advice they give to clients
  • Financial advisers are recognising the benefits of writing bonds, with three in five (61%) stating they are more useful than most advisers believe

Nearly three quarters (73%) of financial advisers said they were either considering or planning to increase the amount of bonds they write for clients in the next year, with exactly a quarter (25%) stating they would definitely increase the amount they write, according to new research from Canada Life.

 

Richard Priestley, Executive Director of Canada Life UK, commented: “Despite the complex, rapidly evolving landscape, the popularity of bonds with advisers shows no signs of slowing. Bonds continue to remain a firm fixture in portfolios, with many advisers recognising the importance and usefulness they hold as a defensive investment option for their clients.

 

“It is unsurprising that more financial advisers are recognising the benefits of bonds, such as top slicing relief, compared to a year ago. However, with 2019 on the horizon, advisers who have yet to consider writing more bond business for their clients in the next twelve months would be wise to consider this option.”

 

The majority of financial advisers (55%) believe onshore bonds play an important role in the advice they give to clients. While three fifths (61%) say bonds are more useful than most advisers believe, a slight increase from 2017 (60%). The number of advisers recommending international bonds to their clients has also risen slightly year-on-year, up from 17% in 2017 to 18% in 2018.

 

Financial advisers are also increasingly recognising the benefits and value of bonds, compared to twelve months ago.

 

Over two thirds (67%) of financial advisers cite tax deferral options as an advantage of using bonds, up significantly from just under half (49%) last year. Meanwhile, over three in five advisers (62%) say top slicing relief is one of the main advantages of writing bonds, a substantial increase from 48% in 2017.

 

Of those planning to write more bonds in the next twelve months, two in five (40%) advisers plan to write a mixture of both onshore and offshore, while over two fifths (42%) intend to only write more onshore bonds.

 

policy makers
Transactional and Investment Banking

Developed World Policymakers Place Their Bets

By, Graham Bishop, Investment Director at Heartwood Investment Management

In a busy period for monetary policy news, three of the world’s major central banks held their formal committee meetings this month. What did this mean for investment markets? Graham Bishop, Investment Director at Heartwood Investment Management, the asset management arm of Handelsbanken in the UK, talks us through it. 

Bank of England: A surprise reaction to unsurprising news

The announcement that the Bank of England (BoE) would raise its base interest rate from 0.5 to 0.75% came as little surprise to investment markets, which had almost fully priced in the move. The Bank’s committee members voted unanimously for the UK’s second rate rise since the financial crisis. The committee also agreed to maintain its current levels of corporate and government bond issuances at (£10bn and £435bn respectively), contrary to some earlier media speculation over the potential for quantitative tightening.  

Given that the BoE did exactly as anticipated, and that Carney’s tone at the ensuing press conference was mildly hawkish, the only slight surprise has been the immediate market reaction – a fall in sterling and gilt yields.  While the precise reasons for this response are as yet unclear, it seems that investors were given fresh insight into the BoE’s thought process, with Governor Carney referencing 2-3% as the bank’s estimated neutral rate (i.e. the rate neither accommodative nor restrictive to economic growth). The market’s reaction suggests that it may not entirely agree with these figures. 

Perhaps this is unsurprising, given the lack of visibility ahead for the UK economy. The BoE has also just released its quarterly Inflation Report, in which it claims that CPI inflation is projected to decline towards its 2% target over the next three years. And while a downward trend is a point of general commonality across the BoE’s range of projections, the wide range of potential outcomes put forward means that there is little scope for certainty.

US: Business as usual for the Fed, but fiscal deficits are growing

In another rather predictable announcement, the US Federal Reserve (Fed) held rates steady at its committee meeting earlier this month, while sending a clear message that more rate hikes would be on the way. Amid a rising inflationary environment, in the wake of seven previous hikes, and with presidential tax cuts adding fuel to the fire, the Fed had little to do this time around. Nonetheless, another two rate hikes are expected in 2018.  At only the midpoint of the Fed’s expected rate rise path (according to the committee’s own predictions), the Fed is already close to its neutral policy rate.  

This month also saw the announcement of the US Treasury Department’s debt issuance for the second half of the year, which came in above previous estimates (and with the largest jump since the financial crisis). The Treasury is financing a widening fiscal budget gap on the heels of tax cuts and spending increases, as the government’s deficit blows out towards as possible $1 trillion by 2020. At the same time, the Fed has begun the process of reducing its balance sheet, adding more supply to the Treasury market; while its pace so far has been very gradual, this is expected to pick up. 

US monetary policy on the brink of entering restrictive territory and a rapidly expanding fiscal deficit give us pause for thought should growth falter ahead. For now, the situation is encouraging, but as things evolve we need to think carefully about US equities and related high beta plays.

Bank of Japan: The rebel without a change

The Bank of Japan (BoJ) opted to effectively maintain its current policy on Tuesday, in that it left its benchmark interest rate unchanged. But the BoJ also announced changes to the allocation of its ETF purchases (now favouring the market cap weighted Topix index rather than the price-weighted Nikkei index) as well as slight adjustments allowing greater movement around the 10-year bond yield (20bps either side of zero, as opposed to 10bp). In the latter, markets may have witnessed a small act of monetary tightening by another name. 

The yield on Japan’s 10-year government bonds initially fell following the announcement, but markets changed their mind overnight and yields leapt up to 12bps on Wednesday – their largest jump since August 2016. Equally haphazard was the market reaction to banking stocks – initially negative but with a swift change of heart, as investors seemingly realised the benefits of a move away from a lower yield environment. Further Japanese currency weakness against the dollar was also positive for both Topix and Nikkei indices. This is good news for our portfolios, which slightly favour Japanese equities.

 
Why Direct Lending is so Attractive to Investors
Transactional and Investment Banking

Why Direct Lending is so Attractive to Investors

At a time when investment and wealth preservation is as challenging as ever, direct lending offers an alternative for asset managers looking to invest.

There is a growing trend for non-bank lenders to loan money to companies, cutting out the middleman. Indeed, institutional investment is now the direct lending in the UK as it has been seen as a way to source alternative finance and funding for a variety of industries.

Direct lending started in the UK in 2005 with consumers borrowing from other consumers. Today, borrowers have increased and widened across many asset classes and the types of lenders have also expanded.

Direct lending is often now used to describe P2P lending and this reflects the growing number of diverse lenders keeping up with the high demand from borrowers.

Direct lending offers an attractive investment opportunity, gaining:

– Higher returns than a savings account could
– Lower volatility than stock markets

Likewise, borrowers are attracted by the lower rates and quick loan decisions.

Why direct lend?

Other investment options aren’t as reliable as they used to be so it has become prudent to invest elsewhere.

Stock markets remain volatile and therefore now difficult to find a safe-haven for money.

Add to this the decreasing yields on the usual ‘go to’ investment products and savings accounts that now offer little return.

Furthermore, Q4 2017 saw inflation rise to 3.0% – with the ever threat of increasing inflation. 

Direct lending is also attractive when compared to other credit-grade investment choices:

A gap in the market was seized

Traditional banks have cut back on business lending in recent times, especially to SMEs, as tighter regulations have changed the post-financial lending culture. These tighter regulations aim to reinforce bank capital requirements and reduce leverage.

This has created an opportunity for alternative lenders and this gap in the market is being seized by investors who are offering loans to mid-market companies as an answer to low-yield problems.

Direct lenders can work under more favourable circumstances, therefore taking on the companies with high leverage simply because they don’t have to adhere to capital requirement guidelines. This results in more attractive returns for the investor.

Direct lending isn’t a passing fad

Direct lending was relatively untapped until recently, but research by the Alternative Credit Council (ACC) has led them to predict that global lending is expected to break the US $1 trillion mark by 2020.

The UK direct lending market is substantial and has grown considerably in recent years – with plenty of room for direct lending to continue to grow further.

The UK direct lending market accounted for £4.5 billion of lending in 2017 – this is an increase of 21% in a year.

Europe is catching up

In 2017, European direct lending grew to around US $22bn, alongside the growth of mergers and acquisitions amongst SMEs. With SMEs seeking alternative ways to finance this growth the two are intrinsically linked.

Institutional lenders now account for more than half of the direct lending in the UK – yet the UK media still remain skeptical about the industry. One of the reasons for this is that direct lending is often mistakenly confused with equity crowdfunding in the media.

Direct lending is much more established in the US and Asia and Europe is set to follow. In fact, shrewd P2P investment is helping clients who may not be able to get finance from banks and this in turn is injecting sluggish economies.

The borrowers benefit from loans that are secured and have straightforward and open arrangement fees from the start.

In turn, investors have the potential for attractive yields, low volatility and low correlation compared to other asset classes:

European direct lenders are teaming up to chase bigger deals and more high-profile firms. For example Zenith Group Holdings Ltd and Non-Standard Finance Plc used direct lenders to meet their financial needs.

An increasing number of investors

Direct lending started with asset managers lending to mid-market companies and therefore filling in the gaps left by the banks. Now other types of companies such as P2P platforms are joining in and taking up the market for smaller loans, while the asset managers have the expertise for the larger loans – creating an even more prosperous and thriving investment climate.

In fact, in 2017 there were more than one hundred direct lending platforms facilitating more than £4.5 billion of lending.

In turn, fund managers can offer bigger loans as the money flows, making direct lending more attractive with potential for returning clients.

Untapped potential

There is plenty of untapped potential from retail gatekeepers who have yet to wholly embrace direct lending:

Are there any downsides to direct lending?

The extra leverage that makes direct loans more attractive to a borrower, is also a higher risk to take if the economy takes a dive.

The need for direct loans grew from the banks refusing businesses simply due to tightening of restrictions – these were safe and dependable businesses that were suddenly cut off when previously they wouldn’t have had a problem. However, due to a more competitive and growing direct lending market, a growing number of direct lenders seek out the higher-risk financing to companies in trouble.

What does the future hold?

The rate of growth in the direct lending market is slowing, but this is all for the greater good as a ‘flight to quality’ is predicted as better lending platforms outperform weaker or less scrupulous ones.

However – there is still plenty of room for growth long term as reflected in the forecasting statistics.

In 2018, there will likely be an increase in collaboration between direct lenders and traditional lenders – they will complement each other – with banks seeing direct lending as a source of capital.

Another factor will be the concept of open banking which is spreading with a ripple effect across the financial world. For example, the UK’s Open Banking Initiative promotes the use of open application programming interfaces (APIs) to provide access to bank customers’ transaction data. This is certainly something to watch in the future with regard to how direct lenders can use this valuable data.

Direct lending will certainly experience change as it evolves in the coming years, but it is here to stay as an alternative investment opportunity which offers good returns – and ultimately it is uncorrelated and relatively liquid in comparison to other classes.

Exo Investing
Transactional and Investment Banking

Recent launch of Exo Investing

  • Launch of Exo leap-frogs existing online retail wealth management services in landmark moment in the democratisation of investment technology
  •  Exo’s unique use of AI offers investors  a truly individualised, adjustable ETF portfolio, daily risk management and absolute transparency, for a low online fee

It was confirmed today that the investment backing the development and launch of the ground-breaking ‘Exo Investing’ retail digital wealth management platform included a private investment from Benjamin and Ariane de Rothschild.  

This investment was alongside that from the founders of Madrid-based ETS Asset Management Factory who supply Exo with its Quantitative investing technology and capabilities and the former heads of the La Compagnie Benjamin de Rothschild SA, Daniel Treves and Hugo Ferreira, who is also the Chairman of Exo Investing.   

The launch of Exo Investing earlier this year saw retail private investors gain access – for the very first time – to the same sophisticated AI-powered Quantitative investment and risk management technology developed over 30 years by quantitative investment manager ETS for institutional investors and the wealthy clients of Private Banks.

Acting as an expert ‘investment co-pilot’,  Exo’s use of AI sets  it apart from even the most sophisticated of the existing robo-advice platforms, introducing new standards of control, personalisation and risk management.

Moving away from the traditional model of static products and predefined portfolios, Exo instead builds each investor a personal, adjustable portfolio of ETFs based on their own investment preferences. Each portfolio is then monitored 24/7 and recalibrated as frequently as daily to both the individual’s risk appetite and changing market conditions, continually managing each client’s long term risk.

Lennart Asshoff, CEO of Exo Investing said“This investment paves the way for Exo to continue developing this ground-breaking solution for the retail market. Opening the door for thousands of private investors to the important benefits that Quantitative investment science offers is very satisfying having seen what a pivotal difference it can make to investment outcomes during my years working at ETS.

“This level of individually tailored portfolio and risk management has never been available to the retail investor before.  The wider public have never been more reliant on their personal investments for their future financial security and we want to open the door to a new category of investing for as many people as possible,  making truly personalised investing available at scale.”

Hugo Ferreira, Chairman of Exo Investing said“Exo Investing is an exciting example of how the latest advances in technology – from artificial intelligence to the growth in computing power available through the cloud – can be utilised to democratise access to the best services available. For years we have wanted to find a way to provide the huge financial advantage that ETS’s systems deliver to a much wider audience, and Exo is just that. The Fintech zone has a track record of democratising finance and we are proud of Exo as the latest and one of the more significant additions, this time in the increasingly crucial world of private investing.

“My long career managing risk for large organisations around the world has taught me that to successfully ride out market turmoil like the 1987 crash, the internet crises of 2001 and the sub-prime debacle of 2008, you need humility, discipline, transparency and risk control.  I found these in spades 20 years ago in the quantitative investing models developed by ETS.  Now Exo is utilising AI and recent  increases in computing power to offer the same portfolio management technologies to a far wider market and at a highly competitive price.  This is a watershed moment for the private investor.”      

With a potential market size of more than 3.2 million private investors in the UK,  and armed with an obviously superior yet competitively priced proposition,  Exo is set to shake up the existing online investing market significantly.  No existing platform, of whatever scale, offers the private investor so much for so little. As this fact becomes more widely known by the UK’s mass affluent market, Exo is set to  build enviable scale and accolades for transforming outcomes for the private investor.

5 Benefits of Investing in Contractors
BankingTransactional and Investment Banking

5 Benefits of Investing in Contractors

5 Benefits of Investing in Contractors

By: James Trowell, head of tax and accounting at contractor specialists, Dolan Accountancy

For most startups, the most common issue they face is cash flow. The need to expand to increase that level of cash flow often involves hiring staff. Whilst this is a positive in terms of managing the ever increasing workload, paying for staff is another story as it absorbs even more of your income. The solution? Look to the flexibility and expertise offered by contractors.

In this article we will explore the top 5 benefits of using contractors to help you grow your business.

 

1. Affordability

The whole process of recruiting and training staff can soon add up cost wise. Recruitment agencies will often charge a fee for filling your vacancy and even advertising yourself can have an associated cost. You’ll also have to consider the cost of your time to train that person up in the role they have filled as well as their actual salary. By hiring a contractor to fill your position, you have the option to choose someone with the expertise or specialist skills that you need so the time needed to train them is often negligible.

2. Flexibility

Unlike a permanent member of staff, contractor’s can work on a project by project basis, so you could just pay for their expertise as you need it. Contractor’s tend to choose this path as they like to be able to set their own hours, which really could be a massive benefit for you. For example if you dropped an email on a Friday night with a list of assignments, you could be coming in on Monday morning to find the list is completed! Remember a contractor is a small business like you and good ones will be keen to meet deadlines, deliver above your expectations with the hope that you will want to engage in their services again.

3. Expertise

Contractor’s are unlikely to have made the move to contracting unless they are experts in their field. This means they keep up to date with the latest industry trends, be that in technology or statistics. This is excellent news for you, as you and your company can benefit for their knowledge. For example they are likely to adopt cutting edge technology and could suggest a new piece of software which could increase your productivity. Not only do you benefit from this knowledge but you also don’t have to pay for them as a salaried employee in the long term.

4. Attitude

When a new member of staff joins a business, they tend to need weeks if not months of training before they can contribute positively to your turnover. Contractors however are used to working on their own and getting on with the job in hand immediately. This means that they ‘hit the ground running’ so you will see a positive input to your business quickly. You will need to be good at setting clear briefs and expectations though, but you shouldn’t need to sit down and explain everything. Instead you can focus on your business knowing your contractor will be completing their projects in the background.

5. Availability

The great thing about using a contractor within your business is that they only need to work for you when required. So if you have a specific project you need some help on, but dont have the capacity yourself, a contractor can come in and fill that gap in the short term. They also tend to build relationships with their employers so that they can be called back in to make additions to their work or start new projects, with the knowledge that both parties have prior experience of eachother.

About the author: James Trowell, is head of tax and accounting at contractor specialists, Dolan Accountancy. Starting off in the admin team at SJD Accountancy James’ role expanded over the years, working his way to accountant and then team manager. Three months ago, Trowell took on the head of accounting and taxation position at Dolan

private debt
BankingTransactional and Investment Banking

A better way for investors to capitalise on private debt

A better way for investors to capitalise on private debt

Simone Westerhuis, LGB Investments

As fixed income yields disappoint, secured loan notes issued by growth businesses could be an attractive avenue for investors, whether they be wealthy individuals or family offices, writes Simone Westerhuis, Managing Director, LGB Investments.

Despite the recent rising rate environment, interest rates are still very low by historical standards and as a result private debt has emerged as one of the chief opportunities for investors searching for yield. This is especially true of high net worth individuals (HNWI) and family offices, as, faced with long-term low interest rates, meagre bond returns, poor hedge fund performance and fluctuating equity markets, they have increasingly turned to alternatives: real estate, private equity and – perhaps most strikingly – to the private credit markets to secure the returns they need for their portfolios.

HNWI and family office investors are particularly well positioned to benefit from the growing appetite from businesses for non-bank funding. According to Preqin’s 2017 Global Private Debt report, the average current allocation of a private debt investor stands at 4.7 per cent of assets under management (AUM). Family offices allocate more than double this figure – 10.7 per cent of AUM – to private debt, more than any other type of investor. This, as Preqin notes, can be attributed to “fewer restrictions, increased flexibility and an appetite for higher returns compared to other asset classes”. In contrast to conventional fund managers, HNWIs and family offices are less tightly regulated and view secondary market liquidity as less important.

But as the private debt market has become more popular, its composition has shifted over the past decade. Up until about the mid-2000s, activity was mainly dominated by distressed debt and mezzanine financing. More recently the trend has been towards direct lending.

Marrying small and medium-sized growth businesses with financing from wealthy individuals, family offices and the mass affluent has considerable appeal on both sides. From the growth businesses’ perspective, it bypasses some of the difficulties that come with borrowing from banks that have retrenched in the post-financial crisis climate, making them inflexible and sluggish counterparties. Without the ability to turn to the corporate bond market to raise funds, SMEs are often willing to pay a premium for increased flexibility and speed of execution.

From an investor’s perspective, meanwhile, direct lending can seem a compelling proposition. One of the main advantages is diversification and the prospect of earning uncorrelated returns to the equity markets. At a time when stock markets have produced strong returns for over a decade one may wonder how long this trend could last. The other is the potential for higher yields relative to the public bond markets. Direct lending offers an attractive, steady cash flow in a climate where quantitative easing has driven bond yields down.

But there are also risks that need to be carefully considered. There is, of course, the heightened credit risk that comes from lending to growth businesses, coupled with the fact that that private debt has yet to be tested in an economic downturn. An important consideration is the intermediary or platform that investors use to manage their loan portfolios. While P2P platforms have simplified the distribution process, they could potentially pose a higher default risk to investors who have little insight into the quality of companies they are directly lending to. When a borrower defaults, the investor often finds himself helpless to take any action directly.

Going through investment funds or trusts, meanwhile, may provide more protection against defaults through established debt recovery procedures. But the risks can vary markedly depending, for example, on whether the manager chooses to use leverage to boost returns and cover fees. The key to success will often depend not only on the manager’s ability to analyse risk, but also on its access to deal flow and ability to fix problems when they occur.

LGB Investments has helped develop another variant of the direct lending instrument: secured loan notes. These are secured, fixed-rate instruments with maturities ranging from six months to five years. Issued by SMEs and growth businesses under the terms of a programme, which enables repeated issuance, they often have seniority in a borrower’s capital structure. Most importantly, loan note programmes will have a designated Security Trustee who holds the collateral for all noteholders on trust and will take action on behalf of noteholders when difficulties arise.

To date, the main investors in these secured loan notes have been individual wealthy investors and family offices, although they are also increasingly catching the attention of institutions. There are a number of reasons investors have found these instruments to be attractive. An obvious one is their relatively high yields and short maturities. The notes offer investment returns of around 6-10 per cent per annum, with the interest rate determined by the credit standing of the issuer and investor demand. By contrast, publicly traded corporate bonds typically generate yields of 2-5 per cent in the current climate. Secured loan notes Issues are commonly listed on a recognised stock exchange to take advantage of the Quoted Eurobond Exemption from withholding tax on interest.

We find that another real advantage is that the programmes offer frequent re-investment opportunities and can often accommodate reverse inquiries from investors sitting on cash. Investors have an opportunity to really familiarise themselves with an issuer and can increase their allocation to a name over time. Robust security arrangements help assuage some of the concerns investors to growth businesses might have about taking on excessive credit risk.

Through our Corporate Finance department, LGB & Co. has established secured loan note programmes for 20 mid-market companies raising close to £100 million to date from HNWIs, family offices and institutions. A recent example was the £40m loan note programme for Reward Finance Group Limited, one of the UK’s fastest growing alternative finance providers. Our research suggests there is substantial room for expansion and that the UK’s immediate addressable secured loan note market is worth around £500m.

Investors do need to carefully evaluate the risks of lending to SMEs – whether through secured loan notes or through other instruments – against their investment goals. But as part of a balanced and diversified portfolio, we believe that in an environment where low yields are the norm and alternatives such as hedge funds are underperforming, secured loan notes offer an attractive way to tap into private debt markets.