Category: Finance

€64bn Non-core Loans Sold Last Year
Corporate Finance and M&A/DealsFinance

€64bn Non-core Loans Sold Last Year

 

2013 was a record year from a transaction perspective with €64bn of Europe’s non-core loans sold as part of portfolio transactions last year, a 40% increase on the previous year, according to PwC’s latest market update.

Increased activity levels were mainly driven by the UK and Ireland, along with Spain and Germany. Richard Thompson, Partner at PwC, commented: “We expect that 2014 will be another record year for the European non-core loan market, with activity levels expected to reach an all-time high of around €80bn. We also estimate that loan portfolios with a total face value of more than €30bn have closed or are in the process of closing already. 

“Transaction activity is fuelled by the continuing need of many European banks to reduce the size of their balance sheet and restructure their operations. Bank restructuring will continue over at least the next five years – with activity likely to be fuelled by the findings of the Eurozone wide Asset Quality Reviews (AQRs) and stress tests currently underway”

PwC estimates that banks across Europe are still holding loan assets of €2.4tn which they regard as non-core. Whilst a large number of banks are taking significant steps to reduce their exposures to these unwanted assets a continual reappraisal of their balance sheets is leading to the identification of additional orphan assets.

Richard adds: “Private equity and hedge funds were the most active buyers in 2013. We expect that to continue in 2014 due to the significant amounts of investment funds raised and the availability of debt financing, especially for more established players in the sector. We are in contact with over 150 investment groups looking to invest in the European market. For 2014, we expect property-backed lending to remain the most active asset class.”

FDI in China Rises 10.4%
FinanceForeign Direct Investment

FDI in China Rises 10.4%


FDI, which excludes investment in financial sectors, totalled US$19.31bn cumulatively in January and February, the commerce ministry said in a statement.

Separately, Chinese overseas investment in the two months fell 37.2% year-on-year to US$11.54bn, the ministry said, with investment to Hong Kong and the European Union leading the decline.

By far the greatest proportion of investment in China comes from a group of 10 Asian countries and regions including Hong Kong, Taiwan, Japan, Thailand and Singapore.

FDI from those economies rose 11.6% to US$16.94bn, the ministry said. US investors piled US$711m into the country during the period, up 43.3%.

“Investment from the 10 Asian countries and the US maintained relatively fast growth,” the ministry said in a statement.

Investment from the European Union declined 13.8% to US$1.05bn.

Of China’s outbound investment, 65.4% of the total, or US$7.55bn, went to Hong Kong, the Association of Southeast Asian Nations (ASEAN), the EU, Australia, the US, Russia and Japan.

But the amount being invested in Hong Kong, the EU and ASEAN declined 62.9%, 11.6% and 2.2%, respectively.

Investment in the US jumped 45.6%, while that to Australia gained 31%. Investment to Russia and Japan “at least doubled”, the ministry said, without providing amounts or specific percentage changes.

China’s total outstanding overseas investment as of the end of last month stood at US$537.2bn, the ministry said.

The figures come after foreign investment into China rebounded in 2013 to US$117.59bn as confidence in the country’s growth potential picked up.

It had declined the year before. Investment by China overseas also rose last year, hitting US$90.17bn, and officials said it could overtake the incoming total as early as this year.

Stronger Performance from Ex-military
Corporate Finance and M&A/DealsFinance

Stronger Performance from Ex-military

 

• One in five (20%) FTSE 100 companies have Board Directors with a military background and 39% have ex-military senior directors 

• 88% of ex-military entrepreneurs believe their training has helped them to be more successful

• 40% of retail investors believe companies run by senior executives with a military background are likely to be better run than those without them

• 38% of retail investors are more likely to invest in a company with a CEO who has a military background, compared to 11% who are less likely to do this

A new report from Professor Merlin Stone, a leading economist, shows that the leadership skills and strategic planning learned in the armed forces transfers very well to the business world, helping to deliver superior growth and investment returns.

Some 62% of senior executives interviewed believe business leaders with a military background perform better under pressure as a result, and 60% think that they are better at defining goals and motivating others to follow them.
The report says that the benefits of a military background extend beyond operating in established businesses: 88% of ex-military entrepreneurs believe their training has helped them to be more successful, and 27% said it made raising funds easier. 

New analysis for the report reveals that one in five (20%) of FTSE 100 companies have Board Directors with a military background and four in ten (39%) of these have ex-armed forces senior executives. Looking at companies in the FTSE 250, 11% and 19% of these have ex-military Board Directors and senior executives respectively.

Furthermore nearly twice as many investment experts (IFAs) believe CEOs with a military background is a ‘positive’. Similarly, 40% of retail investors see companies run by senior executives with a military background as being an advantage, and 38% would be more willing to invest in a company with a CEO who has served in the armed forces against 11% who would be less willing to do this.

The report, which has been commissioned by TIME:REBOOT VCT, a new Venture Capital Trust (VCT) which is the first in the UK to invest exclusively in successful and dynamic businesses run by commercially proven ex-military entrepreneurs, says there are currently around two million ex-military people working in the UK, but with the current defence budget cuts, this number is growing.

Professor Stone’s report says thousands of highly trained military personnel are leaving the armed forces as a result of defence cuts, but as they enter the workforce and many set up their own businesses, they will provide a strong boost to the economy.

Professor Stone said: “Our research shows that many senior executives of companies and investors view a military background in entrepreneurs and people running companies as a positive.

“The UK military is highly professional and well trained, but as a result of defence cuts many of its personnel are moving on from active service and entering the workplace, which is very good news for our economy and jobs.

“From an investment perspective, companies run by former military personnel have a measureable competitive advantage, and investors need to be aware of the opportunities this presents.”

Nigel Ashfield, Managing Director of TIME Investments said: “We have considerable experience of the SME and VCT market and have identified some incredibly strong and financially exciting businesses run by ex-military people to invest in. As a result of this, we are confident of delivering – on a conservative basis and including tax relief – growth in excess of 70% over the first five years and to double our investors money over 10 years.

Stuart Nicol, Founder of Reboot Ventures, who served with the Argyll and Sutherland Highlanders and ran successful VCTs for Octopus Investments said: “By investing in businesses run by ex-military entrepreneurs we expect to be able to prove a positive relationship between military service and entrepreneurial ability. We will do so whilst making money for our investors. This has far reaching benefits to our economy and on the costs and benefits of serving in our Armed Forces.”

Tim Hames, Director General of the British Venture Capital Association said: “TIME:REBOOT VCT is an excellent use of Government tax relief and the kind of honest, innovative finance we need to grow our small businesses and make sure the best people are leading them.”

Christopher Benarr, Head of UK Clients at Berkeley Square Wealth Group said: “It is great to see TIME:REBOOT VCT’s unique investment concept, which couldn’t be better timed as there’s so much support for the military and ex-military amongst my clients. I really like the prudent portfolio approach, aiming to protect the downside and still generate exciting returns.”

Senior executive and financial intermediary viewpoint
• 28% of senior executives interviewed believe that companies run by senior executives with a military background are better run than those who don’t have this. The corresponding figure for financial intermediaries is 32%.

• 27% believe that over the long term, companies run by ex-military people offer potentially higher returns for investors than their competitors – 40% said it has no impact. The corresponding figures for IFAs are 24% and 37%.

• 76% believe that senior executives with a military background have better organisational skills as result of this, and 62% believe that they remain calmer under pressure. 60% think that they are better at defining goals and motivating others to follow them. The corresponding figures for IFAs are 90%, 75% and 68%.

Entrepreneurs with a military background
• 88% of entrepreneurs with a military background believe that the experience they have gained as a result of this has made them more successful as business people.

• 91% believe that they remain calm under pressure because of this background, 88% say that it means that they are better at defining goals and motivating people to follow them, and 84% think they have better organisational skills.

• Some 27% think their military background has helped them to raise funds for their business, against only 3.6% who think this has hindered them here.

Research from an earlier report revealed that companies in the S&P 500 run by CEOs with a military background delivered higher returns that the S&P 500 index over one, three, five and 10 years. It also revealed that they tended to survive longer in their roles– probably because of their market beating performance. They boasted a median tenure of five years and an average tenure of 7.2 years, compared to four years and 4.5 years for all S&P 500 CEOs.

 

Interest Rates On the Up
Corporate Finance and M&A/DealsFinance

Interest Rates On the Up


The Bank of England governor’s statement that interest rates could rise six-fold in the next three years has been met with muted optimism by the boss of one of the world’s largest independent financial advisory organisations.

deVere Group’s founder and chief executive, Nigel Green’s reaction comes after Mark Carney told MPs on Tuesday that the bank rate could reach 3 per cent within three years. It is currently at 0.5 per cent, where it has been since the BoE halved the rate five years ago.

Mr Green comments: “This is, of course, another welcome positive indicator that the economy is recovering.

“Naturally, the forecast is also step in the right direction for anyone who has savings in a bank or building society – and especially for pensioners and others living off a fixed income. These savers, who represent the vast majority of the UK population, are the ones who have been hit hardest by the interest rates being at historic lows for so long.

“However, with rates still not expected to reach even above 3 per cent before 2017, it makes for almost a decade of misery for British savers. As such, I do not expect the millions of hard-working Brits, who have been prudently putting money aside and who have been adversely affected by years and years of monumentally low interest rates, will be hanging out the bunting and popping the champagne corks just yet.”

Earlier this month, Mr Green said that he expected a growing number of British retirees to consider higher risk investments in order to receive a better rate of return as a direct result of the Bank of England’s prediction that interest rates are likely to remain low until the end of the decade.

He explained: “Tired of their cash holdings making them, in effect, poorer over time, I fully expect more and more retirees will turn traditional investment thinking on its head. An increasing number will, I believe, consider higher risk-higher return investment opportunities as part of a well-diversified portfolio in order to be able to fund the lifestyle in retirement they want to enjoy.

“Traditionally, the mindset has been that as we get older we should reduce our exposure to risk and, for example, increase holdings of cash and bonds. However, in today’s world this prudent intention could have serious unintended consequences.”

Crowdfunding Aiming in the Right Direction
Corporate Finance and M&A/DealsFinance

Crowdfunding Aiming in the Right Direction


Jean Miller, CEO of Investing Zone, looks at how crowdfunding could be a future AIM feeder for high-growth technology companies.

Last year, tech flotations accounted for a third of UK IPOs, firmly cementing the country as home to some of the best tech start-ups in the world.

Following this surge, the head of UK primary markets and AIM at the London Stock Exchange, Marcus Stuttard, proclaimed that the pipeline for tech IPOs remains ‘very strong’ for the next year.

Stuttard’s predictions highlight that confidence is returning and investors are getting excited about the potential of new technologies and high-growth companies, something which we’re also witnessing.

Rezatec and Rockstar

British satellite and environmental data products provider, Rezatec, is very close to completing £500,000 as part of larger equity funding round using the InvestingZone equity platform.

Rezatec supplies its customers with high value environmental data products that help them manage the impact of environmental change on their businesses and has also received funding from the Technology Strategy Board (the UK’s Innovation Agency), the UK Space Agency and the European Space Agency. The company has contracts in place with a range of users across the energy, supply chain and agribusiness sectors.

In addition, Rockstar, a network storage solution for the SME market, has successfully raised £325,000 using the InvestingZone platform. Rockstar combines physical storage with a cloud-based functionality so that customers are able to access their data from anywhere in the world. It targets a gap in the SME data storage market left by Apple’s refocus on the consumer rather than the enterprise solutions. The company is already winning orders and achieving revenue, their exciting growth plans which include Private Cloud solutions marks them as one to watch for the future.

Crowdfunding: A feeder for future tech IPOs?

Whilst the growing appetite for hyper-growth companies is reassuring, it’s important for investors to remember that tech start-ups often require larger funding requirements and have longer time scales to market however, they are also generally more likely to generate returns for investors.

What’s needed for ambitious tech start-ups is a stage before IPO. Early-stage tech companies need an opportunity to raise finance, grow effectively and gain valuable experience of working with shareholders. Equity-crowdfunding achieves this by allowing companies to benefit from the experience of sophisticated investors. In the long-term this could enable a smoother – more successful – transition to IPO and avoid the potential of another tech-bubble emerging.”

350IP Beats Targets
Corporate Finance and M&A/DealsFinance

350IP Beats Targets

350 Investment Partners (350IP), managers of The North West Fund for Energy and Environmental, has exceeded 2013 portfolio targets, investing in seven new clean tech and green energy companies across the region.

2013’s financial successes have been particularly beneficial to the Liverpool City Region, which received 30 per cent of the fund’s total financing for
the year.

The portfolio target for the end of 2014 was to have 14 companies on the books, with 350IP achieving this one year before it was scheduled.

Investment for the last year stands at £6.1m, accounting for more than half of the £11.7m invested since The Fund launched in 2011. With several more deals anticipated in the coming months, The Fund aims to be fully committed by the end of the year.

The North West Fund for Energy & Environmental is part of The North West Fund which is financed jointly by the European Regional Development Fund and the European Investment Bank.

The evergreen fund provides investment to environmentally conscious enterprises, and promotes energy efficient business nationwide. This year saw seven new companies added to its portfolio, including Acoustic Sensing Technologies, MHA Lighting, PVC Recycling, Community Switch, Arvia Technologies, Sign Lights and Stopford Projects.

The new businesses join Acal Energy, Imperative Energy, EcoLogicLiving, PlaceFirst, Ultromex, SenseLogix and CableSense in helping The Fund succeed its original target of 14.

Adam Workman, partner at 350 IP, said: “This year has seen us get involved with some really exciting companies. We’re proud to support the sector and put the region on the map as a centre for green energy excellence
and innovation.

“We’re looking forward to further extending our investments this year and engaging with more socially aware enterprises that continue to enhance the UK economy and wider environment. We could be fully committed by the end of this year which is an extremely exciting prospect.”

Investec Specialist Corporate Capital Strengthens
Corporate Finance and M&A/DealsFinance

Investec Specialist Corporate Capital Strengthens

Investec Specialist Bank has announced the appointment of Tim Howson to its Corporate Lending business.

Tim joins the Specialist Corporate Capital team, headed by Callum Bell, which originates, structures and arranges finance for transactions by financial sponsors and corporate clients with an enterprise value of between £100 million and £500 million.

Tim joins Investec from Jefferies & Co, where he was Senior Vice President in the Leveraged Finance team. Tim was responsible for the origination and execution of leveraged loan and high yield bond financings to support financial sponsors and corporate acquisitions. As part of this role, Tim also worked on refinancing transactions across Western Europe, CEE and MENA. Prior to this, Tim worked in the Leveraged Finance team at UBS Investment Bank and the mid-market Leveraged Finance team at Barclays, both based in London.

Callum Bell of Investec, said: “Tim’s appointment reflects our continued strategy of supporting corporate clients and financial sponsors in the mid-market. His origination and lending experience will support the team’s growth ambitions and reiterates our commitment to offering financing solutions to our clients to support their growth.”

Tim Howson said “I am excited to be joining Investec at this time and working in an ambitious, fast developing team focused on building long term relationships with corporates and financial sponsors, delivering financial solutions that help to add value for our clients.”

Claranet Shows Strong Growth
Corporate Finance and M&A/DealsFinance

Claranet Shows Strong Growth

Claranet has released its financial figures and reported a growth of 47 per cent, with turnover across the European Group increasing to £103m (€124m) over the last year (2012/13).

The financial results follow the first anniversary of two key acquisitions, Star (in the UK) and Typhon (in France), which the company made at the end of 2012, and reflect a year of strong performance across the business – with key customer wins and the successful integration of the new acquisitions into the Claranet Group.

Commenting on the last year, Charles Nasser, CEO of Claranet, says: “Our rapid growth this year has positioned Claranet as one of the largest independent managed services providers to mid-sized companies in
Western Europe.

“Our business approach ensures that we focus on the long-term future of the business, to benefit our customers and our staff over time. This means that we continue to invest in developing our services and processes as the company grows, and as the needs of our customers evolve.”

With the increasing consolidation of providers in the technology space across Europe, the acquisitions of Star (in the UK) and Typhon (in France) have ensured that Claranet is well-placed with a broader market offer, following the addition of communications services to its existing portfolio of network and hosting solutions.

The latest financial results top off a year that has seen Claranet positioned as a leader in the Gartner Magic Quadrant for European Managed Hosting, and win two industry Awards – for Entrepreneur of the Year for Charles Nasser (Datacentre and Cloud Awards, in June) and for the Best Customer Service Strategy Award (SVC Awards, in November). These highlights are combined with several significant customer wins that include River Island, Veolia, Lyons Davidson, Total, Elior UK Ltd, N24, Action For Children, Warner Brothers, Radley, Airbus and Peugeot/Citroen, to name just a few.

Commenting on the financial results, Nigel Fairhurst, Chief Financial Officer, Claranet Group, says: “We have achieved what we set out to in these acquisitions, expanding the portfolio with a wider offering for customers, yet ensuring that we took advantage of synergies when bringing the
businesses together.

“This has led to recurring EBITDA on a like-for-like basis, increasing by 95% year-on-year. In addition, the strength of the wider business is reflected in the contracted future revenue for the Group, which was in excess of £167m (€195m) at the end of the FY13, an increase of almost 100% on the previous year. This reflects both the size of the new contracts and the continued trend towards longer contracts.”

Charles concludes: “We are seeing a rapidly maturing cloud services market that is consolidating towards a smaller number of regional players at the mid-market level. Our strong growth last year was underpinned by the successful integration of our acquisitions into the business. Our plans are ambitious and as we look ahead into 2014, we expect the year to be one of further rapid growth and expansion for us across our Western
European market.”

 

Former Colleagues join forces at Insight
Corporate Finance and M&A/DealsFinance

Former Colleagues join forces at Insight

Insight are pleased to announce that Doug Smith has joined their rapidly growing Corporate Insurance consultancy business.

Doug has held previous senior positions as Chairman of Marsh’s Private Equity practice and latterly as Non-Exec Deputy Chairman of Willis M&A practice, and is widely regarded as one of the leading UK insurance advisors on transactional insurance issues to the private equity industry and major/mid size corporates.

Doug will team up again with former Corporate Risk plc colleague Colin Paterson, Managing Director and founder of Insight, and will focus on broadening and strengthening relationships with the private
equity community.

He will also provide strategic advice on growing Insight’s unique concept of introducing client-side (in house) corporate insurance expertise, free from any commercial conflicts, directly to the PE community and their portfolio companies, and to corporate insurance buyers of medium/large corporates.

Commenting on the appointment, Colin Paterson said: “We are delighted to have been able to attract the services of Doug Smith in an advisory non-executive role. Doug is recognised as being one of the UK’s most experienced insurance professionals and has a long-standing track record in advising private equity firms and corporate business from both operational and strategic perspectives on Insurance matters.

We look forward to working together again and I am sure Insight will greatly benefit from his participation and professional input, which will further assist us in rolling out our unique client-side corporate insurance offering and attaining our expansion plans.”

Doug, whose previous roles include Chairman and Founder of insurance broker Corporate Risk plc, Director and Chairman of Heart of Midlothian from 1997 – 2004 together with a number of Public & Private companies, commented: “Insight is providing a valuable service, increasingly recognised by corporate insurance buyers. It allows the key process of insurance renewal and risk issues to be dealt with using the in-house services of experienced insurance professionals from Insight. I am very much looking forward to the challenge of developing Insight in the UK and
European markets.”