Category: Finance

China Becomes World’s Third Largest Investor
FinanceForeign Direct Investment

China Becomes World’s Third Largest Investor

The second year in succession the Asian country has topped the list, outbound direct investment (ODI) from Chinese individuals and organisations has hit a record high, according Xinhua.

According to the findings from the Chinese state-run news agency, ODI figures for mergers, acquisitions and stake investments soared to $108 billion (£66.98bn) in the year. That is a near 23% increase on the ODI figures for China from 2012.

Figures Set to Go Higher

This year though, reports suggest the level of ODI will have receded according to data collated by US Think Tank the Heritage Foundation.

The levels of investment from Chinese firms could actually be set to rise even higher though.

The country’s government has said it intends to relax restrictions on ODI levels. According to the Chinese government, the new overseas investment rules will be introduced on October 6.

Under present rules, firms wishing to make an overseas investment exceeding $100 million from their Chinese base of operations have to meet with government approval. This restriction is set to be dropped, in a move which the Chinese Ministry of Commerce says is:

“aimed at allowing more freedom for outbound investment”

Investments being made into what the government rates as ‘sensitive’, be it a country, region or industry will still need to seek prior approval before closing the deal.

A Global Approach

China is increasingly investing in many areas of the world, from Africa and Europe to South America. There are favoured countries for the country though. The most popular five destinations for investment out of China are:

> Australia
> The USA
> Canada
> Brazil
> Indonesia

There are also favoured sectors, with infrastructure and transport seeing particularly heavy investment in East Africa for example. The majority of the money being invested overseas from China however is being directed to the energy and power sector.

UK retail giant slumps after profit warning
Corporate Finance and M&A/DealsFinance

UK retail giant slumps after profit warning

In a statement, the company said that the challenging UK retail environment would affect its financial performance. With Tesco saying it expect profits to only attain £2.4bn instead of £2.8bn, the firm said it will reduce the half-year dividend by 75% for the year, to 1.16p, saving the firm £600m.

Other savings are also to be introduced. Tesco has said its program of store refurbishment will be slowed for example, with overall spending set to be reduced by £1bn for the year.

The group’s chairman, Sir Richard Broadbent, explained the decisions, saying:

“The Board’s priority is to improve the performance of the Group. We have taken prudent and decisive action solely to that end,

“The actions announced today regarding capital expenditure and, in particular, dividends have not been taken lightly. They are considered steps which enable us to retain a strong financial position,”

The news saw shares in Tesco plummet by 7.2%, closing at 228.70.p, and also saw shares across the supermarket industry suffer, with Morrisons and Sainsbury’s seeing falls to their price as nerves hit the investment scene.

Investors are expecting another round of price wars between the giant chains, as budget chains continue to take market share. Like for like sales for Tesco and other traditional retailers in the segment continue to slide in the UK.

The latest figures from Kantar Worldpanel showed that comparative figures from the group fell by 4% in the three months to August 17, representing a market share of 28% from over 30% last year,

With industry analysts warning that Tesco has tried to please too many of the people too much of the time, and is now consistently coming up short in the customer satisfaction stakes, the group will be hoping its new chief executive can turn the fortunes round.

Charged with looking at every aspect of the business and expected to to oversea a wide ranging senior management change, the firm confirmed that its new chief executive, Dave Lewis, would be taking control of the company from Monday September 1.

Branson Steps in to Give Food Entrepreneurs a Tastier Slice
FinanceSustainable Finance

Branson Steps in to Give Food Entrepreneurs a Tastier Slice

The competition Foodpreneur Fest 2014 invites start-up food firms to pitch their business to Branson is open to retail products, restaurants, nutritious foods and kids’ food.

Winning start-ups in each of the four categories will receive a prize which includes mentoring. The prize will also offer winners a:

“Money-can’t buy support to reach new customers”

Branson will be on the judging panel deciding the winners personally, being joined by such foody luminaries as Paul Linley, the founder of Ella’s Kitchen founder and Hemsley Hemsley founders Melissa and Jasmine Hemsley.

The panel will vote on four categories:

The ‘Most exciting new brand’ award will go to new products looking at getting on supermarket shelves.

The ‘Tastiest start-up’ category is for every type of catering operation, including pop-up restaurants and mobile operations.

The “Best healthy food business” gong is aimed at those offering nutritious foods.

The fourth award will be presented to the winner of the ‘Most loved kids’ food’.

The entry process for the Virgin StartUp Foodpreneur Fest 2014 has already started. Firms interested in applying have until September 3 at 10am to apply, with the shortlisted entrants invited to present to the panel on September 17.

The announcement of the new Virgin awards comes as the Faculty of Public Health in the UK issued a warning that increasing numbers of people are suffering from malnutrition. The cause, according to the faculty, is higher levels of food poverty, with medical conditions such as rickets becoming more apparent as an effect.

FDI Investment Slumps in Zimbabwe
FinanceForeign Direct Investment

FDI Investment Slumps in Zimbabwe

That is the message from the head of the African country’s central bank, with John Mangudya explaining:

“The country received a paltry $67m (£40m) compared to $165m during the same period in 2013”

Mr Mangudya went on to say that his government’s policy of handing economic control to black Zimbabweans had been a factor in the slump. He said the policy had been misunderstood by investors considering Zimbabwe.

The slump comes following Zimbabwe President Robert Mugagbe’s landslide victory in the country’s elections last year. However, it comes after the country had made some recovery from years of hyperinflation.

That was under a unity government however.

Mugagbe’s victory was largely campaigned on his indigenisation policy, which is the cause for the lack of investment according to Mr Mangudya.

He said it is imperative that the government more clearly outlines what the policy means. He said that investors should also be provided with clear guidelines about the policy.

The news of the downturn in Zimbabwean FDI came as the country signed a number of new deals in China. On a visit to the Asian country, with which Mugabe has previously enjoyed strong ties, nine investment deals were signed.

According to reports in the Zimbabwe Herald newspaper, the investments are across a number of sectors including, agriculture, energy, transport and telecommunications. Investment in the country’s tourism industry is also understood to be wrapped up in the deal, but no financial terms or details were provided.


BHP Billiton Announces Metals and Mining Spin-Off
Corporate Finance and M&A/DealsFinance

BHP Billiton Announces Metals and Mining Spin-Off

The move, widely expected by industry analysts, allows the company to simplify its operations. It will see its silver, aluminium, manganese, nickel and coal operations be moved.

The new company, valued at $14bn (£8.4bn) and presently known as NewCo, will list on the Australian stock market (ASX). It will be headed by BHP’s present financial director, Graham Kerr.

The move is subject to approval from shareholders and regulators and is expected to complete in Q1 of 2015.

According to the company, the demerger will allow BHP Billiton to give more focus to its core business operations in the production of coal, copper, iron ore, petroleum and potash, with the chief executive of BHP saying in a statement:

“By concentrating on what we do best, the development and operation of major basins, we can improve our productivity further, faster and with greater certainty,”

The announcement was made following a statement released last week that said BHP was looking at ways that its operations could be simplified. The firm said the changes to its corporate structure would allow for its cash flow generation to be strengthened, giving shareholders a better return on their investments.

With its global headquarters based in Melbourne, BHP Billiton is listed on both the London (LSE) and Australian stock markets. It is also secondary-listed on the Johannesburg stock exchange (JSE) in South Africa and is listed on the New York Stock Exchange (NYSE) across two American Depositary Receipt listings.

The new company will also have a secondary listing in South Africa.

BHP Billiton also announced a 23% rise in profits to $14bn for the year, missing industry forecasts. The firm’s shares on the LSE dropped by over 4% after the announcement on Tuesday morning.

Chiquita Refuses Brazilian Acquisition Bid
Corporate Finance and M&A/DealsFinance

Chiquita Refuses Brazilian Acquisition Bid

Citing the offer as ‘inadequate’ for its shareholders, Chiquita said it was going ahead with its plan to merge with Fyffes, the Irish fruit industry giant, which was announced back in March.

There did seem to be a trace of doubt however, as the firm’s statement released on Thursday continued:

“Having made such a determination, Chiquita has determined not to furnish information to, and have discussions and negotiations with, the Cutrale Group and the Safra Group at this time.”

Cutrale, a fruit juice company and Safra, an investment bank, made the offer to acquire the firm on Monday., releasing a statement saying that the offer was:

“clearly more favourable to the Chiquita shareholders than the proposed merger with Fyffes”.

Chiquita seem to have not reached this conclusion.

The creation of the Chiquita-Fyffes company would result in the world’s biggest banana supplier. Together, the combined operation would control an annual revenue of $4.6bn.

It would also allow the American-based firm to move its operations to Ireland and subsequently avoid higher rates of US corporate tax.

The US is presently taking action to try and reverse the trend for so called, ‘tax inversion‘.

Following the offer on Monday, Chiquita’s shares leapt by 31% in value, with Fyffes seeing a slump of 15%.

At the time of writing on Friday morning, Chiquita’s share price had levelled out somewhat at $13.51 – higher than the $13 per share the Brazilian offer represented. Fyffes continues to slip through the week, presently standing at 0.91 euros per share.

Lenovo Profits Leap as More Acquisitions Targeted
Corporate Finance and M&A/DealsFinance

Lenovo Profits Leap as More Acquisitions Targeted

Announcing the results for Q2, the world’s biggest PC maker saw profits rise to $214m (£128m). Revenue for the same period also rose significantly to $10.4bn, up 18% compared to the same period in 2013.

With its core business in PCs the firm saw nearly half of its total revenue come from this stream.

More of a surprise was the increase in laptop sales, up 12% for the quarter, despite an industry downturn. The increasing popularity of tablet devices helped see a 3.7% decline in laptops being shipped compared to last year.

However, Lenovo performed well in tablets too, as well as other mobile devices, helping the company remain as the leader in its field.

A Quarter of Milestones

A statement about the firm’s Q2 earnings was released by chairman Yang Yuanqing, saying:

“This has been a quarter of milestones for Lenovo – record PC share, a number three ranking in worldwide tablets for the first time and an even stronger number four global smartphone position.”

What will make the news even more pleasing for the firm is the success of its move into other markets, as desktop PCs sales have slumped. Laptops too are going to continue to decline, as tablets and smartphones become the go to gadget.

Indicative of this, Lenovo posted sales of more smartphones than it did PCs. Achieving a record figure of 15.8 million sold units, it represented a 39% increase from 2013.

Mr Yang also went on to explain that the smartphone sector is moving away from high-end and into the more mainstream marketplace.

Remarking on the success of its acquisitions of IBM’s low-end x86 server unit and Motorola Mobility from Google – both likely to close in Q3 – he also hinted at further acquisition opportunities that Lenovo would try to exploit.

Corporate Finance and M&A/DealsFinance

Baker & McKenzie Regains Spot as World’s Largest Law Firm

The firm reported a total fee income of $2.54bn for the year (£1.51bn).

The figures have also revealed a per partner equity profit of $1.29m (£768,000) while the overall global profit for the year hit $910m (£541.9m). That is an increase of 5.6% from the 2012/13 results of $862m (£556.4m).

Twenty-six percent of the Baker & McKenzie’s revenue came from Asia with the Americas accounting for 36%. Its biggest cash generating region was EMEA, generating 38% of the law firm’s revenue for the year.

Cumulatively the firm made over $1bn for the first time in its history, with the chairman Eduardo Leite quoted in Legal Week as saying:

“All of the transactional areas have been very active”,

Mr Leite went on to reveal that wealthier clients are increasingly confident in the stability of financial markets around the world. This is driving greater strategic moves, he continued, explaining that this is very different to pre-recession deals which saw firms acquire others just to get bigger.

The firm also recently celebrated its own acquisition of South African boutique law firm Vani Chetty. It will use the move to set up its own competition practice in Johannesburg. The last year has also seen new offices open in Brisbane, Dubai and Myanmar.

It has been a year of prominent instructions for the firm too.

Most recently it was mandated to handle the sale of the iconic Gherkin building in the City of London. Officially known as 30 St Mary Axe, it is expected to attract a bidding war in the region of £650m from Chinese and US bidders.

Balfour Beatty Urged to Reopen Talks with Carillion
Corporate Finance and M&A/DealsFinance

Balfour Beatty Urged to Reopen Talks with Carillion

If resurrected, a merger between the two firms would see the creation of a construction giant with a combined worth of £3 billion.

The problems occurred when Carillion seemingly advised Balfour representatives to abort the marketing of its Parsons Brinckerhoff arm. A US-based engineering and design firm, Balfour advertised it for sale in May after it failed to reap the rewards expected following its acquisition in 2009.

Balfour Beatty has said the demand was ‘wholly unexpected’ and that to change the terms so significantly was ‘not acceptable’.

Now, however, reports the Guardian, advisors from both firms are meeting again to broach the possibility of restarting the talks. Carillion is still convinced that the deal would bring significant value for shareholders of both entities.

However, it remains convinced that it would be the wrong move to drop Parsons Brinckerhoff.

There are only ten days left to resurrect any talks however, with UK legislation dictating that an offer must be made by August 21 or Carillion must step away from the discussion.

With profit warnings and the departure of CEO Andrew McNaughton accompanying news of the proposed sale of Parsons Brinckerhoff, Carillion saw its chance. An all-share merger deal was subsequently put to the Balfour board, despite it being the far bigger concern and posting revenues of £10bn in 2013.

Many industry commentators have predicted a tie-up between the two will realise total cost savings of £250m. Other analysts suggest Balfour could be past the worst of its troubles though, suggesting that a strengthening construction pipeline workflow will help the firm win domestic contracts again – something it has failed to do of late.

Balfour Beatty Awarded £129m Smart Motorway Scheme
FinanceInfrastructure and Project Finance

Balfour Beatty Awarded £129m Smart Motorway Scheme

Balfour Beatty, the international infrastructure group, has announced the award of a £129m scheme to upgrade a 13.4 mile stretch of the M3 through Hampshire and Surrey to a “smart motorway”. The upgrade, for the UK Government’s Highways Agency, will increase capacity, reduce congestion and shorten journey times for the 120,000 motorists who pass through this part of the network every day.

The M3 between Junction 2 (interchange with the M25) and Junction 4a (Fleet) will be upgraded to a four-lane motorway by converting the hard shoulder to a permanent running lane. Electronic signs, operated by a regional control centre, will be installed to manage the flow of traffic in response to dri­ving con­di­tions.

Mobilisation work is due to start at the beginning of August. Main construction works is due to start this autumn with completion scheduled for spring 2017. Construction activity will include installing and refurbishing gantries, new static and variable signs, concrete safety barriers, drainage and surfacing works.

The contract is the latest in a series awarded to Balfour Beatty since the company was appointed to the Highways Agency’s National Major Projects Framework in 2010. In June 2014, Balfour Beatty was awarded the £184m M60 J8 to M62 J20 smart motorway scheme. In April 2014 the company’s construction joint venture with Skanska completed upgrading a 12 mile stretch of the M25 to a smart motorway, and in January 2014 Balfour Beatty completed upgrading parts of the M4 and M5 to a smart motorway in a £88m scheme.

Balfour Beatty executive chairman Steve Marshall said: “The Highways Agency’s approach to using technology in this way reduces the costs of the road network, provides additional capacity and improves journey times. This award further strengthens our position as one of the UK’s leading contractors for smart motorways and reflects the strength of the relationship we have built with the Highways Agency over the last 20 years. ”

The M3 passes through Chobham Common, one of the largest areas of heathland in Surrey, and Balfour Beatty’s sustainable design will take into account ecological considerations with natural habitats reinstated and enhanced.

Short-Term Energy Thinking a Risk to Investment – CBI
Corporate Finance and M&A/DealsFinance

Short-Term Energy Thinking a Risk to Investment – CBI

Short-term thinking is distorting the debate on our energy future, risking investment and opportunity, according to Confederation of British Industry (CBI) deputy director-general Katja Hall.

And in a new CBI poll of over 550 business leaders and 2,300 households, businesses rate security of supply as a crucial energy objective for the UK, with 73% citing it as very important.

Over half of businesses (57%) also think the UK’s energy security is worse than it was five years ago, reflecting that capacity margins are likely to hit a low next winter.

Businesses and households are concerned about keeping energy bills affordable (96% of businesses and 94% of households rating this as important or very important). And both groups support the UK’s aim to tackle climate change (70% of businesses and 76% of households rating this as important or very important).

In a speech to the CBI Energy Conference in London today, Hall said: “The outcome we all want to see is politicians, investors, business users and consumers finding common ground – working together to tackle our energy and climate change objectives.

“Long-term certainty is needed but just as policies start to click into place, the political climate heats up again. It feels like a game of snakes and ladders.

“One careless comment or populist proposal – whether we’re talking about cutting support for onshore wind farms or freezing energy prices – can make businesses feel like they’re right back at square one.

“For investors, this is a real worry. And when that investment can go anywhere in the world, it should be a real worry for politicians too.”

While 60% of business leaders and 56% of households believe that taking action now to cut carbon emissions will deliver long-term economic opportunity, one in three businesses disagree (32%), and nearly one in four consumers are unsure (23%), suggesting more must be done to communicate the importance of, and opportunity presented by, the low-carbon transition.

Businesses and households also believe energy company profits are a key reason for energy price rises (53% of business leaders and 61% of consumers citing this as the main reason for energy price rises), perhaps indicating a lack of trust in the market. Profits accounted for only 4.3% of an average bill in 2012.

Hall said: “We must inject long-term thinking into this debate. We need an honest conversation about future bills and how to support businesses and consumers in managing them.

“People don’t necessarily get how our energy objectives relate to each other, let alone how they relate to the bills they pay each quarter, leading to a lot of misunderstanding and mistrust.

“With profits very much under the spotlight, it’s important to remember that companies need to make a fair return in order to make the investments we so desperately need. But it’s right to demonstrate to consumers that there is nothing to hide.”

Both business leaders (47%) and consumers (38%) think that more competition in the market is the best way to keep future bills down. After this, 38% of businesses and 35% of consumers cited energy efficiency as the best solution to ensuring energy costs remain affordable.

“Energy efficiency has for too long been the poor relation in this debate. We need investment in supply but this must be combined with a renewed push to cut our energy usage,” Hall said.

“To date, we have over-promised and under-delivered. Energy efficiency needs to move up the rankings and be seen as a critical investment.”

New Appointment to Rockefeller Foundation Board
FinanceSustainable Finance

New Appointment to Rockefeller Foundation Board

The Rockefeller Foundation, now in its second century of advancing the well-being of humanity, has announced the appointment of Ravi Venkatesan to its Board of Trustees. Venkatesan is the former Chairman of Microsoft India and currently Founder and Chairman of Social Venture Partners India, a network of philanthropists addressing social problems. He is also a Venture Partner at impact investor Unitus Seed Fund.

“With our commitment to catalyse new ideas and innovations at The Rockefeller Foundation, I am delighted to welcome Ravi Venkatesan, a proven leader with strong business and technology backgrounds,” said Board Chair David Rockefeller, Jr. “His experience will be invaluable in advancing the Foundation’s commitment to scaling innovations that expand opportunity, realize shared prosperity, and create jobs for more people globally.”

“Our century of investment in Asia has focused on addressing our dual goals of promoting more inclusive economies and building greater resilience against shocks and stresses,” said Dr Judith Rodin, President of The Rockefeller Foundation. “Ravi, with his commitment to philanthropy along with his eye for solutions and relentless drive for innovation, will provide essential guidance to our work in the years ahead.”

“I am thrilled and honoured to be joining The Rockefeller Foundation Board of Trustees,” Venkatesan said. “The Rockefeller Foundation’s history of supporting the ingenuity of innovators who have transformed and improved billions of lives of poor or vulnerable people is unparalleled, and I very much look forward to contributing to its legacy.”

As Chairman of Microsoft India between 2004 and 2011, Venkatesan helped build India into Microsoft’s second-largest presence in the world and one of its fastest growing markets. He was instrumental in creating Microsoft India’s Project Shiksha, a computer literacy program which has so far trained over 40 million school children in India.

Prior to Microsoft, Venkatesan was the Chairman of Cummins India, a leader of power solutions and engines. He is also the author of an acclaimed book “Conquering the Chaos: Win in India, Win Everywhere,” published by Harvard Business Review.

UK's Financial Services Trade Surplus is the World's Biggest
FinanceInfrastructure and Project Finance

UK’s Financial Services Trade Surplus is the World’s Biggest

New figures from TheCityUK, the private-sector association and industry lobby group promoting the UK financial and professional services industry, reveal that the UK’s trade surplus in financial services is the biggest in the world, more than two and a half times bigger than the next largest surplus recorded by the US and three times higher than Luxembourg in third and Switzerland fourth.

The latest figures available show that the UK’s financial services trade surplus was US$71bn in 2013, up from US$68bn in 2012. According to TheCityUK, this demonstrates the huge competitive advantage the financial and related professional services industry brings to the UK, and the importance of the industry in attracting international business activity which creates jobs and generates economic growth.

Chris Cummings, chief executive of TheCityUK, said: “The UK leads the world when it comes to exporting financial and related professional services. While New York tends to do well in charts because of its size, it is really a domestic financial centre; London is the only truly global financial centre, boasting a unique cluster of both financial and related professional services firms. And it is not just the UK’s financial capital; it is also Europe’s beating heart.

“But we cannot afford to rest on our laurels, especially with other cities such as Singapore continuing to expand and grow. This is why London’s ability to innovate, reinvent itself and seize new opportunities is so important. We have seen this recently with the deals agreed with the Chinese, which will cement the UK’s position as the biggest renminbi centre outside Asia, and also with our status as the leading Western country for Islamic finance. The Financial Services Trade & Investment Board is another initiative vital to the UK’s status as a global financial centre.”

The new report from TheCityUK, The UK as an International Financial Centre, reveals that the number of financial centres seeking international business is growing, and Asian centres such as Singapore and Hong Kong are benefiting from shifting global trade patterns. However, in addition to these well-developed regional hubs, smaller centres such as Tokyo, Toronto, Moscow, Istanbul and Dubai are also developing alongside niche local centres such as Zurich, Sao Paulo, Johannesburg and Mumbai. Many of these centres are using London as a model and basing systems and processes on UK practices and principles.

Financial Services Firms Upbeat as Business Volumes Rise
Corporate Finance and M&A/DealsFinance

Financial Services Firms Upbeat as Business Volumes Rise

The UK’s financial services firms saw another rise in business volumes in the three months to June, and optimism continued to pick up across the sector, according to the latest CBI/PwC survey.

The survey of 98 firms revealed that business volumes rose across many industry sub-sectors, with the exception of finance houses and parts of the insurance industry. However, overall profitability fell unexpectedly after six quarters of robust rises, with pricing power under pressure and costs rising in many sub-sectors. At the same time, employment was scaled back.

But looking ahead to the next quarter, financial services firms expect business volumes to grow at a solid pace, profitability to rebound, and numbers employed to increase slightly.

Firms’ confidence in the longer-term outlook is underlined by plans to invest more in marketing and IT over the year ahead. The most important elements in firms’ growth strategies in the next three months are attracting new customers and cross-selling to existing ones. For the year ahead there are several areas of focus: among them, improvements to sales & distribution and customer relationship management.

Respondents highlighted the increased regulatory burden and inadequate systems capacity to meet demand as factors likely to limit their business over the next year.

Matthew Fell, CBI Director for Competitive Markets, said: “Despite a surprise fall in profitability, financial services firms are upbeat about their prospects, with business volumes rising across most sectors.

“Firms are focusing on two key strategies for growth in the near-term: finding ways to retain existing customers, by offering them more products and services, and investing in marketing, sales and distribution to attract new customers.

“But the sector is still facing a number of significant challenges. The adverse impact of regulation on business expansion has crept up the agenda and concerns about the ability of firms’ business systems to cope with new demand has risen to its highest level in thirteen years.”

Respondents to the survey indicated that headcount fell in the quarter to June, with a slight rise expected next quarter. On the basis of ONS data, employment in the financial services sector is forecast to stand at around 1,132 by the end of Q3 2014, almost 13,000 higher than a year earlier. This would leave employment 79,000 lower than its peak in Q4 2008, but 35,000 above the trough in Q1 2010, implying that just under one third of the ground lost during crisis will have been recovered.

Man Group Acquires Numeric
Corporate Finance and M&A/DealsFinance

Man Group Acquires Numeric

Man Group Plc, one of the world’s largest independent alternative investment managers, has entered into a conditional agreement to acquire Numeric Holdings LLC.

Numeric is a privately-owned, Boston-based quantitative equity manager with US$14.7bn of funds under management as at 31 May 2014.

Founded in 1989, Numeric has an attractive and established investment track record across a range of long only and long-short, fundamentally based quantitative strategies. Based on annualised returns, over 95% of Numeric’s current strategies have historically outperformed their selected benchmark over one, three and five years. 100% of Numeric’s long only strategies covered by eVestment rank in the top quartile of their respective peer groups over one, three and five years.

Numeric’s business has seen substantial growth in recent years, with funds under management increasing from US$7.6bn at the end of 2012 to US$14.7bn as at 31 May 2014. Numeric generated EBITDA of US$47m for the year ended 31 December 2013.

Under the terms of the acquisition, Man will pay US$219m in cash at completion, with up to US$275m of further consideration payable to a broad group of the Numeric management team and employees following the fifth anniversary of completion under an option arrangement, dependent on the run rate profitability of the business. The regulatory capital usage associated with the Acquisition is expected to be approximately US$325m.

Withdrawn M&A Value Highest Since 2008
Corporate Finance and M&A/DealsFinance

Withdrawn M&A Value Highest Since 2008

The value of withdrawn global M&A has reached US$271bn year to date – the highest total since 2008, according to analysis from Deloitte, the business advisory firm. “Incomplete blockbuster deals have pushed the proportion of withdrawn deal values to 20% against the long-term average of 15%,” said Iain Macmillan, head of M&A at Deloitte. “However, the percentage of withdrawn deal volumes remains consistent with previous years, with just 3% of announced deals withdrawn this year.

Pfizer’s unsuccessful bid for AstraZeneca accounts for 43% of the withdrawn total value, and is the only deal this year that makes the top ten of largest global withdrawn deals since 2005, said Macmillan.

“The post-crisis M&A world is made up of two competing forces. One the one hand, the market confidence, bolstered by positive economic indicators, is back. At the same time getting deals completed is becoming increasingly complex. The valuations are picking up and sellers want to get the best for their shareholders. Increased scrutiny requires larger deals, particularly cross-border ones, to consider a wider group of stakeholders. Moreover, under UK takeover code, a reduction in the time for negotiations means bidders need to be better prepared.
“By the end of 2014, we expect global M&A deal volumes to surpass those of last year, but not turn into the bumper year many predicted at the start of the year. Current activity is being driven out of the US, with Europe catching up fast,” added Macmillan.

UK Inward Investment on the Rise
FinanceForeign Direct Investment

UK Inward Investment on the Rise

Inward investment projects into the UK rose by 15% last year, as it retained its position as Europe’s number one destination for global investors while simultaneously increasing its market share.

The 799 projects were the highest number ever secured by the UK according to professional services firm EY’s annual UK Attractiveness Survey.

The overall European market grew by just 4%, meaning the UK secured one-fifth of all European projects, close to its record high over the past decade. Its performance saw the UK extend its lead over second-placed Germany as a Foreign Direct Investment (FDI) destination, as both countries pulled away from the remainder of Europe.

The UK has also moved from eighth to fifth in the worldwide ranking of countries investors regard as attractive for FDI over the next three years – its highest ever position – overtaking Germany for the first time. Only China, the United States, India and Brazil are ahead of the UK.

Steve Varley, EY UK&I chairman and managing partner, said: “The UK’s performance was nothing short of stellar and was achieved against the backdrop of more modest increases across Europe. The message that the UK is open for business is being received loud and clear by international investors, but as the global economy evolves, the UK must continue to respond in order to stay ahead.

“With intra-European FDI increasing and almost two thirds of our survey respondents identifying the UK as a gateway to Europe, clarification on the UK’s relationship with the wider continent is essential.”

The UK was the clear leader in attracting projects in the knowledge industries. Software investments surged by more than 50%, meaning the UK secured more than a third of all projects in what is now Europe’s largest FDI sector.
It also attracted 52 research and development (R&D) projects. That was 20% more than Germany, giving the UK a Europe leading market share of 18% R&D FDI. The UK also led the way on headquarters, contact centres, logistics, international distribution centres and sales & marketing projects.

Mark Gregory, EY’s chief economist, said: “The UK’s success in attracting R&D and HQ investments reflects the positive impact of initiatives to reduce corporation tax and incentivise R&D investment via the Patent Box.
“It would be sensible to consider approaches that have the potential to strengthen the UK’s appear for other types of project as we look to the future of UK FDI.”

Apple Buys Beats: What Does it Mean?
Corporate Finance and M&A/DealsFinance

Apple Buys Beats: What Does it Mean?

Apple, the company that transformed digital music into a worldwide phenomenon, confirmed on 29 May that it was buying Beats Electronics for US$3bn. This is a move that will help Apple reinforce its position in the new world of streaming music and stay ahead of the personal accessories explosion.

New research from Futuresource Consulting provides market context which reveals the full extent of the market opportunity.

The global consumer electronics (CE) market has been moving skywards since the recession of 2009, but with growth confined to mobile devices and the emerging markets. Many CE brands are struggling as more competitors enter from China and new brands compete in high growth niches like wireless audio.

Since 2009, total CE sales have risen at 9% CAGR, reaching US$676bn worldwide in 2013. However, the European market has slumped from 26% of global CE consumption in 2009 to just 21% in 2013. Meanwhile, emerging markets have grown to account for an estimated 50% of worldwide CE market value in 2013, China’s domestic market alone accounting for around 15%.

Audio has been relatively buoyant, spurred by the boom in mobile music and streaming services, which have driven demand for accessories like wireless speakers and headphones. Sonos, which has pioneered wireless music systems, doubled sales to US$535mn in 2013. Beats Electronics, launched just five years ago, has become the market leader in high end headphones and enjoyed estimated sales of over US$1.5bn in 2013. Pure, which drove DAB hardware in the UK, is now pushing into networked audio players.

Ironically, Apple, which started the MP3 revolution, has seen iPod sales decline sharply as smartphones have taken on the role of music player with many consumers.

From a music streaming angle, consumer spend on global music subscription services such as Spotify and Deezer was estimated to be just under US$2bn in 2013.

There is still significant potential for the market to grow, with music subscriptions accounting for just 10% of the total music market spend last year, equivalent to around 25% of the digital music market. This is expected to exceed US$5bn in 2017, equivalent to 30% of global music market spend. In comparison, spend on online video subscription services such as Netflix last year was almost US$5bn.

In Sweden, music streaming accounted for around 70% of total market spend in 2013, up from around 20% in 2010.
Many consumers are moving away from ownership towards an access model, for both music and video. Total “pay per download,” for example track and album downloads from services such as iTunes, declined in the USA last year, significantly down in Sweden and stabilising in the UK. Some consumers are changing their behaviour and this is impacting ownership, although most music buyers are still in the transition somewhere between buying CDs, buying digital tracks and albums – with the final step paying for a streaming subscription service such as Spotify.

Paid-for streaming subscriptions are increasingly driven by in-home wireless audio products, such as wireless speakers (e.g. Sonos) and integrated Hi-Fi with airplay, Bluetooth and the like.

Global shipments of wireless home audio products grew by over 100% in 2013 to reach 27 million units. Futuresource’s latest Living With Digital consumer research indicates that owners of such devices are 2.5 times more likely to pay for a digital music subscription compared to the overall population.

Are Gift Aid Small Donations Working?
FinanceSustainable Finance

Are Gift Aid Small Donations Working?

Charity Finance Group, the Institute of Fundraising and the National Council for Voluntary Organisations (NCVO), have released a new survey to find out how the Gift Aid Small Donations Scheme is working.

Following recent figures released from HMRC which show £7million had been claimed in the first year of the Gift Aid Small Donations Scheme, this new survey aims to find out the experience amongst the voluntary sector on how the scheme is working. Estimates from government forecasted the Gift Aid Small Donations Scheme could bring in around £50 million a year for charities.

Anna Bloch, Senior Policy and Public Affairs Officer at Charity Finance Group said: “As early indications show that the government’s Gift Aid Small Donations scheme has fallen well below the intended target, we want to understand why this is happening. A number of reasons could be responsible such as a lack of clarity around the eligibility criteria or an overly burdensome claiming process. This research will allow us to have an informed conversation with government about how to improve the scheme, so that the sector can make full use of the value of this scheme. It is crucial that government engages with the sector on this issue to ensure the effective use of charitable funds.”

Daniel Fluskey, Head of Policy and Research at Institute of Fundraising said: “We want to see the Gift Aid Small Donations Scheme be as successful as possible, contributing extra resource to thousands of charities’ income. With only £7million claimed so far, we think this is the right time to explore whether the scheme is operating as well as it can and for organisations to tell us their experience of the scheme. We want to know whether the scheme is easy to use for those charities who have made a claim and find out the reasons why others have not yet done so. We hope that this survey provides us with some useful knowledge that enables us and government to best ensure the scheme is a success.”

Cultural Integration a Problem in M&A
Corporate Finance and M&A/DealsFinance

Cultural Integration a Problem in M&A

Lack of cultural integration process and planning as well as top talent flight are key people-related M&A concerns for senior business leaders the world over, according to a recent survey by financial services company Mercer.

In fact, throughout Asia, Latin America, North America and Europe, approximately one third to one half of respondents said that they have no process for assessing culture and leveraging results. These same deal leaders are also very worried about top talent leaving their organisations soon after M&A deals close, with 75 to 80% saying that they are “very” or “moderately” concerned.

“M&A activity poses multiple challenges for companies in today’s global economy, requiring innovative and practical strategies for retaining key talent and integrating organisational cultures,” said Graham Pearce, Leader for Mercer M&A Europe. “This is especially true for companies in markets where high levels of employee mobility and significant differences in workplace and local cultures make post-deal integration challenges a threat to the company’s performance.”

On a positive note, business leaders acknowledged that people-related issues are gaining more prominence in M&A situations than in the past. This is particularly true in Asia, where a full 84% agreed that people issues are more prominent, followed by Latin America (62%), North America (60%) and Europe (47%).

Thomson Reuters Election of Board Members
Corporate Finance and M&A/DealsFinance

Thomson Reuters Election of Board Members

Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, has announced the election of three new members to the company’s board of directors at the company’s annual meeting of shareholders, held in Toronto.

Sheila C. Bair, 60, is a Senior Advisor to the Pew Charitable Trusts, and currently serves as a member of the boards of Host Hotels & Resorts and Banco Santander. Bair previously served as the Chair of the Federal Deposit Insurance Corporation and has held senior positions at the New York Stock Exchange, Commodity Futures Trading Commission and the US Department of the Treasury.

Michael E. Daniels, 59, is currently a member of the boards of SS&C Technologies Holdings and Tyco International, as well as a trustee of Holy Cross College. Daniels previously spent 36 years with IBM where he held senior roles in sales and technology.

P. Thomas Jenkins, 54, is Chairman of OpenText Corporation and has served as a member of its board since 1994. Jenkins served as President and Chief Executive Officer of OpenText from 1994 to 2005. Jenkins previously served in several managerial and technical capacities at various technology companies.

“We are fortunate to welcome three exceptional new directors,” said David Thomson, chairman of Thomson Reuters. “We are honoured to draw upon their deep experience, expertise and perspective as we continue to grow our global business.”

The company also today announced that David W. Binet has been appointed Deputy Chairman of the Board of Directors. Binet is President and Chief Executive Officer of the Woodbridge Company Limited, and has served as a director of Thomson Reuters since January 2013.

IPO Deals on the Up
Corporate Finance and M&A/DealsFinance

IPO Deals on the Up

The market for initial public offerings (IPOs) has been exuberant as uncertainties over the US “fiscal cliff” and eurozone debt crisis have diminished and corporate confidence returns, according to a strategist at private bank Coutts.

James Butterfill, Global Equity Strategist at Coutts, says that Though UK IPOs are showing some signs of frothy prices, the deals keep coming, and IPOs in the UK so far this year (58 deals worth US$13bn in total) have almost matched the total value of last year’s new listings. “The key difference to last year is that IPOs are being priced at the lower end of their ranges due to concerns over market valuations. Many issuers have been retailers, such as Poundland and Pets at Home, with deal sizes typically at the smaller end – up to US$100m,” he says.

“However, whereas last year’s UK IPOs appreciated on average by 16% by year end, this year has been more challenging, with shares down by 5% on average since listing. This contrasts with the US, where average IPO gains have been 10%, and also lags the 4% gain achieved across the rest of the world.

“Amid the UK IPO fever, concerns have emerged that investors may be suffering from flotation fatigue. Fat Face, the retailer, pulled its planned London flotation after citing weak economic growth and doubts as to whether it would raise the funds it was seeking. Other deals press forward at the low end of their valuation range, albeit still on a higher multiple of earnings (PE) than the London market average.”

London remains an attractive market on which to list shares, reflecting the UK’s attractive corporate tax rate and the London market’s liquidity and proven track record,” says Butterfill. “Investors may be more wary of valuations, but a flurry of upcoming deals led by Zoopla, Wizz Air and River & Mercantile confirm that investor appetite remains.”

Unilever Simplifies Plc Share Structure
Corporate Finance and M&A/DealsFinance

Unilever Simplifies Plc Share Structure

Unilever has announced that it has purchased, for a consideration of £715m, the rights left in family trusts by William Hesketh Lever which are convertible in 2038 into 70,875,000 Unilever PLC ordinary shares. The consideration is equivalent to £10.09 per ordinary share and represents a discount of 63% to the closing share price on Friday May 16th 2014.

As a result of this transaction core earnings per share will be enhanced by 2% on a full year basis as the fully diluted share count used in the calculation is reduced by 70,875,000 shares, or 2.4% of the combined Unilever Group total.

Jean-Marc Huët, Unilever CFO, said “I am very pleased that we have concluded this agreement with the trusts. It is good for all our shareholders. It is another step in the simplification of Unilever’s capital structure, making Unilever easier to understand, and eliminating ahead of time the burden of a significant dilution of shareholders’ interests.”

AstraZeneca Rejects Final Pfizer Takeover Offer
Corporate Finance and M&A/DealsFinance

AstraZeneca Rejects Final Pfizer Takeover Offer

AstraZeneca, the UK drugs company, has rejected a “final” takeover offer from US drugs firm Pfizer.

Pfizer had offered £53.50 on Friday but AstraZeneca told Pfizer at the weekend that the price needed to be at least 10% higher, valuing AstraZeneca at about £74 billion.

Pfizer made a new offer of £55 per share, valuing AstraZeneca at about £69 billion, an offer that AstraZeneca’s chairman Leif Johansson said did not meet the price that the US company was told was necessary.

AstraZeneca’s shares fell 14% to £41.45 after news broke of the rejection.

Pfizer’s moves to take over AstraZeneca have been surrounded by controversy, with politicians and unions expressing fears that a takeover would hinder AstraZeneca’s drug research and lead to job losses among the firm’s 6,700-strong UK workforce.

Pfizer planned to create the world’s largest drug company, with its headquarters in New York, but based in the UK for tax purposes – a strategy known as “tax inversion” whereby Pfizer could pay the UK corporate tax rate of 20%, rather than the 35% rate applied in the US.

Johansson said Pfizer’s pursuit had been “fundamentally driven” by the corporate financial benefits, adding that “Pfizer has failed to make a compelling strategic, business or value case.”

Pfizer had said that its improved offer of £55 per share was “final” and could not be increased.

Fujitsu Appoints Michael Keegan as Head of UK & Ireland
Corporate Finance and M&A/DealsFinance

Fujitsu Appoints Michael Keegan as Head of UK & Ireland

Fujitsu has announced it has appointed Michael Keegan as Head of its £1.8 billion business in the UK and Ireland. Keegan’s new role sees him take the reins from Duncan Tait, who was recently promoted to Head of EMEIA, Corporate Senior Vice President, Fujitsu Ltd.

Keegan has worked at Fujitsu for a number of years and has spent the last three and a half years leading Fujitsu’s successful Technology Products Group for the UK & Ireland. His appointment comes on the back of solid growth for Fujitsu UK & Ireland under Tait’s tenure. Having built a strong foundation and focus for the company, Tait led the company to 12 consecutive quarters of growth during his three year time in the role. Under Keegan’s leadership, the business will focus on growth in the Private Sector and Defence, as well as its strategic work in Government and driving success in its product business units.

“Michael has the breadth of commercial experience that is required to continue to drive the UK & Ireland forward,” said Duncan Tait, Head of EMEIA, CSVP, Fujitsu Ltd. “With nearly thirty years’ experience in the IT sector, and over six years leading various business units for Fujitsu UK & Ireland he has a proven ability to lead and accelerate growth.”

Keegan’s experience in the IT sector includes holding senior leadership roles at the Royal Mail Group/Post Office Ltd, Magex, MasterCard and Nat West. Since joining Fujitsu in 2006, he has worked across a number of business units, including Government. Keegan will report directly to Duncan Tait in his new role.

Keegan’s promotion to the head of the UK & Ireland forms part of a larger restructure for Fujitsu, promoting increased collaboration amongst business units as the company seeks to take advantage of growing globalisation in the ICT market. This has resulted in the creation of larger regions, all of whom report directly in to the Japanese headquarters. The UK & Ireland will become part of the EMEIA region enabling Fujitsu to serve its regional and global customers more efficiently and effectively.

Charles Russell Appoints Islamic Finance Expert
FinanceIslamic Finance

Charles Russell Appoints Islamic Finance Expert

Law firm Charles Russell LLP has appointed Ashley Freeman to head up the Islamic Finance practice in the firm’s Financial Services team. Freeman, who joins the firm as Senior Counsel, has extensive global banking and financial services experience, encompassing strategic, transactional and regulatory matters in both Islamic and conventional industries.

Freeman has expert understanding of cross-border and comparative law issues; particularly the inter-play between common law, civil law and Shari’ah precepts. His arrival reinforces the breadth of Charles Russell’s financial services practice and the growing demand for Islamic finance expertise in the UK market.

Freeman’s expertise, developed through many years’ experience in-house at the Central Bank of Bahrain and in private practice with City of London firms, includes bank mergers, acquisitions, conversions, receiverships, restructurings and insolvencies. He has considerable transactional experience, including experience of asset-backed finance, project finance, acquisition finance, property finance, leasing finance and all Islamic financing techniques. Freeman also has excellent knowledge of equity and securities funding, securitisations, asset and fund management, insurance and takaful, financial trades, derivatives and payment systems.

Freeman has documented and directed the documenting of numerous multi-million dollar lending facilities and bond issues (including several sovereign issues) and other complex funding transactions. He will work closely with Jon Bond in the London office and Wesam Alshafei in the Bahrain office and will be instrumental in expanding the team’s capability.

Commenting on the appointment, Jon Bond, Head of the Financial Services sector at Charles Russell, said: “Ashley’s arrival is a testament to the firm’s focus and continued success in the Financial Services sector. Ashley brings significant experience in Islamic Finance, particularly in the UK and Middle East and this together with his broader banking experience will further enhance our offering to our clients. We are delighted to have him on board.’’

Ukraine Crisis Hits Investor Confidence in Russia
FinanceForeign Direct Investment

Ukraine Crisis Hits Investor Confidence in Russia

In addition to souring relations between Russia, Europe and the United States, further escalation of Russia’s engagement in Ukraine could cost Russia more than 3 percent in GDP in real terms or USD115 billion in current dollar terms on average in 2015, according to global information company IHS.

The conflict could also exacerbate recessionary pressures, and lead to a reduction in European real GDP of about 0.15 percent overall.

Russia’s economy, already likely in recession, will dampen further in the face of a deteriorating political situation; tougher sanctions; falling investor confidence; and a business climate worsened by fears of retaliation against western companies that produce in or sell to Russia, according to the IHS scenario.

A severe slowdown of Russia’s economy in the second half of 2014 and continuing into 2015 would lead to a reduction in European real GDP growth by about 0.15 percent overall, but with large variations between countries, the IHS study says. Most affected would be traditional machinery and equipment and chemical products’ exporters such as the Netherlands, Belgium and Germany. Also impacted would be Italy and Spain, as would countries highly dependent on Russian imports, such as Finland.

Additionally, non-European economies stand to suffer from the slowdown. Among these are Argentina, Australia and Brazil, who would suffer from lower world demand for their commodity and manufactured exports, triggering spill-over effects on their own trading partners in Asia and Latin America.

IHS economists developed the scenario in response to heightened tensions brought about by Russia’s annexation of Crimea and its ongoing dispute with Ukraine following the ouster of Ukraine’s president and scheduling of new elections in May.

IHS Chief Economist Nariman Behravesh said: “While Russia could end up paying a very heavy economic price for its annexation of Crimea and its ongoing conflict with Ukraine, the negative impacts on other parts of the world, notably Europe, will also be hard to avoid.”

Change Needed for Sustainable African Growth
FinanceSustainable Finance

Change Needed for Sustainable African Growth

Sustainable economic growth in Africa will require a step change in approach from both investors and governments, according to new research released today by FTI Consulting, Inc., the global business advisory firm dedicated to helping organisations protect and enhance their enterprise value. The research reveals major shortfalls in the way governments attract investment, as well as how companies engage with key stakeholders.

The research, based on the opinions of investors, political and business leaders attending the World Economic Forum on Africa, shows that public opinion now holds significant influence over the business operating environment in Africa. Despite this, 76 percent of those polled believe that companies do not effectively communicate the benefits that their investment brings to their host countries. As nations in Africa become more discerning towards Foreign Direct Investment (“FDI”), a poor communications strategy could jeopardise the initial approach and long-term success of a company’s investment.

On the other side of the investment partnership, host governments must review the way they attract and handle FDI. The research conducted by FTI Consulting shows that 73 percent of those surveyed believe that governments have not been very effective in encouraging investment, and 79 percent think governments impose unreasonable expectations on investors. Although the benefits of investing in Africa are widely recognised, 52 percent of respondents believe investment still comes loaded with risk. This, compounded by unfair demands from governments may deter future investors.

“Companies need to modernise their approach to investing in Africa. The old way of doing business, isolating a company and its investment from the local and regional communities, is no longer effective. Rather than putting barriers around investments, engagement is now the key to recognising and avoiding the risks so many are still concerned about,” said Mark Malloch-Brown, Chairman of the Europe, Middle East and Africa region at FTI Consulting.

Lord Malloch-Brown continued, “Governments have a pivotal part to play in communicating the tangible benefits of FDI. Although natural resources have created pockets of wealth in certain nations, 51 percent of those we polled believe oil has hindered sustainable economic growth in Africa. Future success in Africa relies on companies and populations sharing wealth and growing in tandem. Host governments have an important part to play in brokering partnerships that allow African people to access the benefits that FDI brings.”

Ryanair Expands 737 Fleet
Corporate Finance and M&A/DealsFinance

Ryanair Expands 737 Fleet

Boeing and Ryanair have finalized an order for five additional Next-Generation 737s, valued at $452 million at list prices. Today’s announcement brings the total number of unfilled Next-Generation 737 orders for the Ireland-based ultra-low-cost carrier to 180 airplanes.

“The 737-800 is the perfect airplane for us as we continue to expand our fleet to cater to both business passengers and tourists who want to visit and explore Europe at affordable, reliable rates,” said Michael O’Leary, director and CEO of Ryanair. “The addition of these highly efficient airplanes will help provide our customers with additional options when it comes to planning their travel.”

The airline announced last year an order for 175 of the airplanes. Ryanair is the world’s largest 737-800 customer, with orders placed for 528 of the type to date.

The Boeing 737-800 is the best-selling version of the highly successful Next-Generation 737 family. Known for its reliability, fuel efficiency and economical performance, the 737-800 is selected by leading and low-cost carriers throughout the world because it provides operators the flexibility to serve a wide range of markets.

“Ryanair and Boeing share a rich history together. The 737-800 offers strong operating economics and will provide comfort and reliability to Ryanair passengers,” said Boeing Commercial Airplanes President and CEO Ray Conner. “We are honored to be chosen by Ryanair as they expand their fleet and look forward to continuing our partnership for decades to come.”

Headquartered in Dublin, Ryanair operates more than 1,600 flights daily from 68 bases connecting 186 destinations in 30 countries. Currently operating more than 300 737-800s, Ryanair took delivery of its first in 1999, and now operates the largest fleet of Boeing airplanes in Europe. 

Today’s announcement brings the total number of 737s ordered to date to more than 11,000. Boeing currently has more than 3,700 unfilled orders for 737s.

Increasing UK Car Production Driving M&A in Supply Chain
Corporate Finance and M&A/DealsFinance

Increasing UK Car Production Driving M&A in Supply Chain

The increase in UK car production is driving substantial growth in automotive supply chain mergers and acquisitions, according to a leading industry expert.

KPMG’s UK Head of Automotive, John Leech, said KPMG has acted as corporate finance advisor to vendors of automotive suppliers on five separate successful deals in the last seven months and he expects activity to increase.
“The reason for this is fast-growing UK car production, notably by Jaguar Land Rover which is requiring suppliers to attract investment to expand capacity and set up overseas facilities,” he said.

KPMG’s automotive M&A specialist, Simon Heath, said “Buyers include automotive suppliers from US, China and Europe but also private equity excited by forecast growth in UK car production to two million vehicles in 2017 which might see the UK beat its all-time production record.

“And it’s not just the pure growth in production that is attracting these buyers; there is an on-shoring trend gathering momentum as UK car manufacturers highlighted a desire to onshore over £3 billion of parts currently supplied from overseas in 2012. Our own analysis shows this on-shoring figure has grown substantially since then.”

Overseas trade buyers are frequently under pressure to follow and co-locate with their manufacturers, and so many pure Asian or North American suppliers are considering European acquisitions to grow their global footprint, said Heath. At the turn of the year, Ford announced plans to cut its number of suppliers by 40%, and so the pressure to internationalise is intense, he added.

“The UK has risen up the list of favourable locations within Europe to invest in. We have a clear growth story, premium carmakers enjoying attractive margins and the most joined-up industry and government in Europe with a focus on supporting innovation such as low-carbon vehicles,” he said.

Latest figures from the Society of Motor Manufacturers and Traders (SMMT) revealed that car production had grown by 12% in March, driven by demand from the EU.

Corporate Finance and M&A/DealsFinance

GE Capital Announces Seventh Unitranche Deal

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GE Capital International and Ares Management Ltd. announced today that the European Senior Secured Loan Programme (ESSLP), a €1.7bn joint venture between the firms, has completed its seventh transaction with the closing of a £153m unitranche facility to refinance Parkdean, a holiday park operator in the UK owned by Alchemy. Ares provided an additional £27m of subordinated debt to complete the £180m refinancing package.

This transaction brings the total commitments to more than €800m in unitranche financing provided through the ESSLP since the programme was launched in 2013. The ESSLP has provided financing to support private equity-backed businesses across Europe and spanning a wide range of sectors, including the recent refinancing of NoteMachine owned by Corsair and Montagu’s acquisition of Dutch Ophthalmologic Research Centre (D.O.R.C).

Owen Verrier Jones, Head of Mid-Market Origination at GE Capital International, said: “This latest transaction demonstrates the benefits of scale, flexibility and ease of execution of our unitranche partnership, which is becoming an increasingly popular alternative to traditional senior debt structures in the mid-market. Parkdean is one of the best operators in the market with a first rate management team at the helm. We’re delighted to support them as they look to further grow their business.”

Mike Dennis, Partner at Ares Management Ltd., said: “We are delighted to partner with both Alchemy and Parkdean’s management team on this transaction. By providing both the unitranche with our partners at GE and a subordinated tranche of debt, we clearly demonstrated our ability to tailor solutions to the borrower’s needs as well as our flexible and innovative approach to the European Direct Lending market.”

This latest deal follows the recent announcement that GE Capital International and Ares Management Ltd. were named the joint “Unitranche Lenders of the Year” for 2013 by Private Debt Investor. Parkdean were awarded Best UK Holiday Park Operator at the 2013 British Travel Awards .

Harris Williams & Co. Advises Telecoms Firm on Significant Investment
Corporate Finance and M&A/DealsFinance

Harris Williams & Co. Advises Telecoms Firm on Significant Investment

The investment, completed on April 17, 2014, was led by bankers from Technology, Media & Telecom Group as well as from Harris Williams & Co.’s London and San Fransisco offices.

“Upstream has delivered tremendous growth over recent years, which is testament to the strength of the management team and of the demand fulfillment marketing platform it has developed since its inception in 2001,” said Thierry Monjauze, head of Harris Williams & Co.’s London office and a managing director in the firm’s TMT Group.

“Following the investment, Upstream will leverage Actis’ relationships and expertise to expand its customer base and solution suite and drive continued expansion,” added Mike Wilkins, a managing director in Harris Williams & Co.’s TMT Group.

Upstream is the industry leader in emerging markets mobile monetisation. Upstream works with mobile operators, ecommerce brands and app developers in 40 markets helping them to sell their products to mobile consumers through sophisticated demand fulfillment marketing campaigns, while increasing customer loyalty and providing deep customer insights. Its clients include the Vodafone Group, Telecom Italia Mobile (TIM), MTN, T-Mobile and Etisalat. Upstream has direct marketing and billing access to more than 1 billion emerging market consumers through their mobile handsets, offering them personalised propositions. The company has already generated an estimated $1 billion of incremental revenue for its clients and grew its revenues by 61% in 2013 with new services and markets being added on a monthly basis.

“Actis has a first-class reputation as an emerging market investor. Its track record of partnering with founder and entrepreneur management teams is exceptional,” commented Marco Veremis, CEO and founder of Upstream. “Upstream will benefit from Actis’s deep expertise in emerging markets and its highly complementary regional presence. Upstream’s founders and management team are glad to see Actis subscribing to our vision and look forward to a close collaboration in executing our high growth strategic expansion plan for the coming years.” Veremis has led the business since its foundation and will continue to lead the company after Actis’ investment.

Actis invests exclusively in the emerging markets with a growing portfolio of investments in Asia, Africa and Latin America; it currently has $7 billion funds under management. Combining the expertise of more than 120 investment professionals on the ground in nine countries, Actis identifies investment opportunities in three areas: private equity, energy and real estate. Actis is proud to actively and positively grow the value of those companies in which it invests and in so doing, contribute to broader society.

Harris Williams & Co., a member of The PNC Financial Services Group, Inc. (NYSE:PNC), is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements and capital markets advisory services.

Harris Williams & Co.’s TMT Group has experience across a broad range of sectors, including software, internet and digital media and infrastructure solutions. Within these segments, the TMT Group focuses on targeted subsectors including application software, data and informatics, eCommerce, education technology, energy technology, financial technology, healthcare IT, infrastructure software, IT and tech-enabled services, mobile, online advertising and marketing services, public sector software and telecom, data center and networking solutions. For more information on the firm’s TMT Group and other recent transactions, visit the TMT Group website.

Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.

Temenos Appoints Martin Frick as Head of APAC
Corporate Finance and M&A/DealsFinance

Temenos Appoints Martin Frick as Head of APAC

Temenos, the market-leading provider of mission-critical solutions to the financial services industry, has appointed Martin Frick as Head of APAC, based out of the group’s Singapore office.

Martin brings over 20 years of relevant experience in banking and banking technology. In this career, Martin has been a Senior Executive of Raiffeisen Bank in Switzerland as well as Executive Director and Head of Custody Processing Service at UBS. More recently, Martin has been working in banking technology and was previously Managing Director of Asia Pacific for Avaloq. He is a qualified economic computer scientist, and has an MBA.

Temenos already has a very strong reputation and track record in the APAC market. In 2013, the APAC business grew licensing by 19% and now boasts revenues of over USD100m, serving more than 150 customers, including Bank of Shanghai and Bank Sinopac. Martin’s appointment will strengthen Temenos’ APAC team, positioning it to take advantage of the very strong growth being seen in the market as a whole, with industry analyst Gartner forecasting the APAC banking-software market to grow at a CAGR of over 9%, reaching USD 2.7 billion in 2017[1]. In conjunction with Martin’s appointment, you can read his perspective on the private wealth market and APAC here.

Martin Frick, Head of APAC, Temenos, commented: “I am delighted to have been appointed to head up Temenos’ APAC region. My decision to join Temenos was based on its reputation as the market-leading vendor of banking software across the retail, microfinance, Islamic, corporate and private wealth markets. It was also influenced by Temenos’ strong global presence, its market momentum, its industry-leading levels of R&D and its multi-product set. I am proud to be part of a company that has such a good standing within banking technology, and such a great future ahead of it.”

Corporate Finance and M&A/DealsFinance

Steve Back Joins Emerisque Brands as Operating Partner

Emerisque Brands, a specialist, growth-oriented private equity sponsor based in Mayfair, has announced that Steve Back has joined the firm as an Operating Partner.

Back’s initial focus is assisting the executive management of the firm’s Italy-based fashion portfolio, consisting of MCS Group (MCS menswear) and Industries Sportswear Company S.p.A. (Henry Cotton’s, Marina Yachting, Coast Weber Ahaus and the licensed brand 18CRR81 Cerruti).

Most recently, Back was recruited to restructure and take private Monsoon plc, a UK- based fashion retailer and was ultimately named its Chief Executive Officer.

Under his tenure there as Chief Commercial Officer, Back negotiated and repaid the company’s debt; restoring the c. £1 bn Monsoon to £100m EBITDA profitability. He was previously Chief Executive Officer of the supermarket group, Sommerfield PLC, in the mid 2000’s and oversaw an accelerated growth plan there which led to £1.5bn growth in the first year and a subsequent take-private transaction in a deal valued at £1.1 bn. Mr. Back has held a number of other executive and financial positions during his career in the retail industry, including with Laura Ashley Ltd., Chef & Brewer Group Ltd., Ryman Group, Grand Metropolitan Retailing and Budgens Stores Ltd.

“We are delighted Steve has joined Emerisque,” said William Knight, of Emerisque Brands. “His proven experience, specializing in sustainable business building and business recovery, supply chain efficiencies and financial and operational restructuring will be enormously helpful in creating value within the portfolio.”

Adyoulike Announces Major UK Acquisition
Corporate Finance and M&A/DealsFinance

Adyoulike Announces Major UK Acquisition

Adyoulike, the French native technology platform and network, has announced that it has acquired Content Amp, the UK’s leading native distribution and content service.

The combined company had a turnover in 2013 of $5million. The expected turnover for what will be Europe’s first pure-play native advertising company will be around $10million in 2014.

Adyoulike has pioneered native advertising in France since its backing by French venture capitalist Banexi Ventures Partners in October 2012. The company is now seizing on the buzz around native with the first of a planned string of European acquisitions, starting with Content Amp in the UK market.

Content Amp will rebrand as Adyoulike UK. The acquisition will see the founders of Content Amp, Francis Turner and Dale Lovell, join the Adyoulike management board and run the UK division of Adyoulike. This will entail expanding native advertising formats into the UK market.

Julien Verdier, CEO of Adyoulike, comments: “This acquisition creates an immediate market leader in the European native advertising space. In Content Amp we have identified an experienced team that is as excited about native advertising as we are. Their expertise in all things content, plus extensive brand, publisher and agency contacts in the UK and combined with our market leading native advertising technology, is the perfect fit for Adyoulike to lead the expanding UK and European native advertising market.

“We have found a UK partner that shares our vision and strategy to turn Adyoulike into a global native advertising technology provider. “

Francis Turner, Content Amp co-founder and newly appointed managing director of Adyoulike UK, adds: “The native advertising market continues to be 2014’s hottest topic for brands, publishers and agencies. We have been running native campaigns over the last 12 months and have seen great advertiser appetite and outstanding results and performance, particularly when compared to stagnating and commoditized traditional display. There are a number of great opportunities to grow the Adyoulike native advertising solution in the UK.

“As one entity, Adyoulike and Content Amp offer a wealth of content expertise and native advertising options that solve many of the challenges around creating and distributing branded content, bringing a scalable solution to brands and agencies. We will be the only company of our type in the UK market.”

Philippe Herbert of Banexi Ventures Partners adds: “Adyoulike’s strategic position in native advertising perfectly fits our search for future leaders of digital advertising, bringing creativity and scalable distribution together. The UK deal is very much in keeping with this strategy as Adyoulike expands globally. We are confident that Adyoulike is set to become a global leading native advertising network, as native advertising is the biggest trend in digital marketing of the last two years.”

Brooks MacDonald Group Plc Acquisition of DPZ Capital Limited
Corporate Finance and M&A/DealsFinance

Brooks MacDonald Group Plc Acquisition of DPZ Capital Limited


• Acquisition of Jersey based DPZ for an initial consideration of £5.7m, made up of £3m in cash and the issue of New Ordinary Shares in the Group at a value of £2.7m. The total consideration payable by the Group will not exceed £13m, which includes c.£1m of net current assets.

• Significant expansion of, and enhancement of the skills and offering of, the Group’s international and offshore division.

• Expected to be earnings enhancing in the full year to June 2015.

• Increases pro forma discretionary funds under management by £360m to £6.04bn.

DPZ is a well-established wealth management business based in Jersey which was founded in 2007. It manages a range of distinct investment strategies founded on its core competencies: asset allocation, manager selection, fixed interest and credit investing, and equity selection. Funds under management since DPZ’s inception have grown rapidly and, as at 31 March 2014, DPZ had c.£430m of funds, c.£360m of which is managed on a discretionary basis, c.£60m of which is managed on an advisory basis and c.£10m is managed on an execution only basis


Should the full value of DPZ funds under management transfer to BMI, based on their value as at 31 March 2014, the consideration would be, in total, £10.8m (excluding net current assets).

The consideration will be satisfied by an immediate cash payment of £3m together with a payment of New Ordinary Shares in the Group to the value of £2.7m. The number of shares issued will be based on an agreed price of 1706.4 pence per New Ordinary Share. A further payment in cash of £2.4m will be paid in October 2014. These three elements together, totalling £8.1m, represent 75% of the total consideration.

Based on the value of DPZ’s funds under management at 31 March 2016, a cash payment will be made comprising the total consideration due at that date less the upfront consideration already paid.

All of the cash payments will be financed from the Group’s internal resources and the exact number of shares issued by the Group as part of the upfront consideration will be separately announced.

Reasons for and benefits of the acquisition:

The Group’s stated strategy has been to build on the successful integration and growth of its international division, BMI, which was acquired in 2012, with further expansion of the international team and its capabilities, thereby strengthening its offering and accelerating its growth rate. Since acquisition, BMI has grown its funds under management and has increased the size of its team by 15 staff. The acquisition of DPZ is consistent with furthering this growth strategy.

The acquisition will increase the Group’s international presence significantly, with an increase in discretionary funds under management managed out of the Channel Islands of over 50%. In addition, DPZ brings additional skills to the business, which are expected to prove valuable routes to growth. First, the Group intends creating a new Fixed Income offering based on the existing DPZ team who have been very successful in the asset class. Secondly, the Group will create a new Platform Team reflecting the success of DPZ’s International MPS solution enabling this offering to be expanded further.