Thursday, 8 December 2016

As the City’s leading Financial PR advisor on IPOs, Abchurch keeps a close eye on trends

With the current IPO market somewhat uncertain as a result of Brexit, investor confidence in companies looking to list on the London Stock Exchange is difficult to gauge.  Despite the total number of listings being approximately 50% down on this time last year, the environment within which the successful floats have occurred is important to note.  Whilst high profile floats such as Misys have hit turbulent headwinds and been forced to shelve their IPO plans in recent times, others have flourished in demanding circumstances.  Hollywood Bowl Group, the operator of bowling centres, completed their IPO with a market capitalisation of £240m; Autins Group, the insulation company, floated on AIM raising £26m; and Luceco plc, the British electronics company, listed at a market capitalisation of £209m earlier this month.

London’s Q4 IPO landscape continues to look resilient with three noteworthy floats: ConvaTec Group Plc, the medical products company achieved the largest float of the year with a market cap of £4.39bn; FreeAgent Holdings plc, provider of cloud based SaaS accounting software solutions for small UK businesses raised £10.7m with a market cap of £34.1m; and Filta Group, the kitchen specialist raised £6.2m on AIM with a market cap of £22.4m., the price comparison website also intends to float on the LSE for around £400m following its successful demerger from Esure. In fact, over 27 companies, including TimeOut and Hotel Chocolat, had floated on AIM by H1 2016 for a combined value of $1.2bn – a 72% increase on the same half the previous year.  Moreover, the average market cap of AIM companies has been growing steadily and is now at an all-time high of £83.0m in 2016.  These trends empirically validate the position that, whilst Brexit may have temporarily affected IPO confidence, there is still a healthy appetite for companies going public on the London markets at a realistic price.

This notion of market resilience is endorsed by the head of Ernst and Young’s IPO leader for UK and Ireland, Scott McCubbin, who predicted earlier this month that there will be a resurgence in UK IPOs in 2017 as companies and investors acclimatise to post-Brexit market conditions.

With interest rates remaining in the doldrums, Abchurch believes that the London Stock Exchange will remain a highly competitive exchange for future IPOs in the final quarter of 2016 and looks forward to more IPO activity in 2017. 

Thursday, 1 December 2016

Can the fintech revolution upstarts find their place in the City ecosystem?

High growth startups scaling at a rapid pace are faced with a fork in the road, particularly in the tech industry. Start-ups invariably tread one of two paths: either develop a viable product to commerciality on a shoestring with a view to a trade sale, or scale up through a series of funding rounds before looking to enter public markets. For the latter, there is the inevitable question of identifying and mitigating risk. How does the average punter, the high net worth (HNW) sophisticated investor or the fund manager accurately gauge the risk they are taking on these fledgling startups, many of whom are armed with compelling pitches about their future growth prospects, future P/E ratios and targeted EBITDA?

Ideally, you would look for analyst coverage on a promising company, particularly if they seem credible, with considerable revenue growth and robust executive management. Analysts and house brokers cannot realistically write about target startup companies in any depth as it is a problem of scale and limited supply – there are simply too many startups and too few analysts to write about them with the necessary information to be credible.

Startups such as Crowdmix, the social networking app which fused music streaming into its platform, raised £15m from big hitting private investors in the City and then went into administration eight months later. The burnt fingers of various private City investors could be attributed in part to asymmetrical information and a lack of effective due diligence in the Company. However, it is prototypical of the problems that private investors face when weighing up the possibility of investing in fast growing companies with minimal track records looking to fundraise. 

Companies like Wheatfromchaff are positioning themselves as the fintech disruptors offering an independent screening and rating product, CrowdRating, which bridges the gap between investors and early stage companies. It uses a checklist driven scoring process to produce objective, standardised ratings across the key areas of management, product and investment returns. It looks increasingly likely that such services will become inherently part of the narrative of burgeoning startups caught in the funding ether: either too small a market capitalisation to be considered worthy of research or too large that the potential for multiple returns is diminished. CrowdRating’s main point of differentiation is that it helps solve asymmetries of information for both sides of the equation: for private retail investors, institutional investors and broking houses.  

It seems unthinkable that technology can ever truly replace the knowledge and cumulative experience of a broking house, and therefore CrowdRating should not be seen as a like for like replacement for the traditional research analyst. But with the investment research industry set to be profoundly affected by the regulatory reforms that are being enforced by the second EU Markets in Financial Instruments Directive (MiFID II), sites like CrowdRating can act as a technological supplement to traditional equity research and, in so many words, sort the wheat from the chaff. 

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Monday, 4 April 2016

Weekly Wrap Up: Predicting the future with social media

Last week it was revealed that a new trading platform,, aims to inform traders about potentially market-moving events hours before they hit mainstream news outlets. How do they do this I hear you ask? No, not through a call center like room filled with psychics. The platform simply tracks social media conversations.

I use the word ‘simply’, as the website actually analyses 22bn bits of data every day from various social media channels, including twitter and blogs, alerting users if it spots a spike in activity or sentiment. So, just a bit of light cyber stalking then.

Closer to home, such technology could change the way PRs handle crisis communications for their clients. Imagine if your organisation’s communications advisor could pick up a potential crisis situation before the press did, even if it was only by an hour or two. That way you and your advisor would have between 20 and 120 minutes (that is the length of time estimated by between the event being flagged and a price movement) to calm the waters, correct the error, prepare for the storm, and mitigate the situation.

The platform uses an example that it identified the Smiler roller coaster crash at Alton Towers within minutes, nearly an hour before media reports were published and Merlin Entertainment’s share price dropped by 10pc. Another example where the algorithm caught on was with the public opinion fallout regarding Volkswagen. By picking up the words “recall”, “pollution”, “cheating”, “EPA”, “scandal”, “tests”, “pollution” and “emissions”, the platform caught wind of the potential story around two hours before markets closed that Friday. News outlets subsequently picked up the story after trading hours and shares in the car manufacturer had fallen 16pc when markets opened on Monday.

However Gareth Mann, Chief Executive of stresses that “it’s not a predictive analytics engine, it’s an indicator that something’s going on that you need to look at.” In case you were wondering too, the algorithm, which continually evolves and learns as it goes along, uses only 10pc of the data available to it, ignoring information that would not be relevant to the markets such as a person tweeting ‘I don’t like my phone’ compared to a conversation about company results or a CEO’s behavior.

If this technology is proved to consistently work, it is a real game changer for all industries that involve reacting to unexpected human or business catastrophes. That also includes the media, who wouldn't want to miss out on this prediction tool. This shows how much social media has taken hold of our daily lives. We look to social media platforms for news and more specifically flash news before traditional media outlets. Even the press now look to these areas by way of informing themselves.

Social media platforms are becoming the first port of call where customers or the public make complaints or voice their grievances, therefore it is important for organisations to be fully engaged with these outlets in order to get a better grasp on public sentiment that could potentially affect their reputations. Perhaps it is time for the communications industry to adapt this technology so that in the near future, it can benefit clients and Companies by helping them to be better prepared to respond to special situations.

Last week, Crowe Clark Whitehill appointed Lisa Mead as its Private Client tax partner. Ashurt appointed Nick Elverston and Amada Hale to its global TMT team.

Cyber stalking – The action of searching for people online in order to find more information about them whether this is for business purposes on LinkedIn.

Sunset Boulevard
Glenn Close will be performing in her West End debut in Andrew Lloyd Webber's celebrated musical Sunset Boulevard at the London Coliseum 1 April–7 May.

Christie’s Lates
On the first Tuesday of every month, Christies will keep their doors open late. Between 6pm and 8:30pm for a post-work drink, to hear experts talk about art, interior design and collecting, and to see what happens behind the scenes at 85 Old Brompton Road

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Friday, 18 March 2016

Weekly Wrap Up: Brexit you got to let me know

Brexit. This spurious word has been on the tip of the entire nation’s tongue for what seems like an eternity. The question of whether Britain should remain in the European Union or not is a pertinent one and is no doubt sparking much debate throughout households around the country. Over the last few weeks, we have watched David Cameron’s attempt to re-negotiate the terms of Britain’s membership in the EU in an attempt to appease the nation and subvert the increasing support for Brexit. The conclusion of all the campaigning and the ultimate result will be realised in just over three months’ time when the British public will vote on whether to remain in the European Union or not. Perhaps though, in the meantime there are lessons in crisis communications and reputation management that can be learnt from the current state of affairs. From a communications perspective the debate and the two possible outcomes can be compared to a crisis situation for a large conglomerate. Comparisons can be drawn from the scandals facing Volkswagen or TalkTalk and in the even more recent past Uber. What these crises and Brexit have in common is that the consequences remain unknown both in terms of the ultimate outcome and the fate of those involved. The politicians and the company executive’s fates will be/are determined by their actions. In other words, the stakes are high for all parties involved.

The Brexit crisis has come to a head over the last few weeks as key politicians in Cameron’s cabinet have pledged allegiance to the ‘In’ and ‘Out’ campaigns, ultimately revealing whether or not they stand behind him. So, who are the key players and how are they faring in the crisis so far?

First, we turn to the Prime Minister, David Cameron. Arguably, he is at the centre of the crisis and perhaps in the most interesting position in terms of what he can achieve but nevertheless he has the most to lose if the vote does not go in his favour. David Cameron has been furiously re-negotiating the terms of the UK’s membership to the EU in an effort to improve the UK’s position as well as encourage the public to vote no to Brexit. What has he actually achieved though? And how is he handling himself?

According to BBC News, in terms of Britain’s sovereignty, Cameron has secured a commitment to exempt Britain from a closer union with the EU as well as negotiating a new “red-card” power, meaning if 55% of national parliaments agree, they can veto a commission proposal. It remains to be seen whether such a power would ever be used and whether the government could ever mobilise that kind of multi-national support. On the other hand, in terms of migration and benefits, Cameron had to concede one of his most crucial points. He failed in his original demand to ban migrant workers from sending child benefit money home in the face of strong opposition from Poland. According to the Mail Online, voters consider this a major failure in Cameron’s negotiations. An opinion poll concluded that 62% think net migration to the UK from the EU is too high and Cameron’s failure arguably means that migrants will not be discouraged. From a crisis communications perspective this is a major loss for Cameron. In this debate public opinion is everything and given the migrant crisis, migration issues are at the forefront of voters’ minds. The concession that Cameron made will undoubtedly encourage some people into the Brexit camp.

On the other side of the debate are those that believe the negative aspects of being a part of the EU far outweigh the positives. Michael Gove’s allegiance to the Out camp was not wholly unexpected due to persistent rumours of his position. On the other hand Boris Johnson’s is seen as a demagogue but has been generally well received. He has positioned himself as deeply pro-European and does not believe it is necessary to equate voting out with being anti-Europe. In the Telegraph, he detailed his views on the subject concluding that he will vote no but that ultimately, his opinion and those of his peers will be forgotten. In reputation terms, perhaps it is Gove who has taken a bigger risk. Not only has Gove allied himself with the exit campaign, but he has also explicitly criticised Cameron’s concessions. The Independent reported Gove stating that the EU agreement is not legally binding and as such the concessions agreed by Cameron could well be meaningless. In terms of Gove’s reputation, it is difficult to fully understand the ramifications of his decision to so publically undermine the Prime Minister. It can be argued that in the political sphere these sorts of tactics are necessary to get ahead. However, they can also have a negative impact on public perception and significantly affect reputation.

Ultimately, the crisis is not yet resolved. The debate has descended into political infighting and scaremongering, resulting in a lack of clarity around the issues at hand. The ramifications for the UK of remaining in the EU or choosing to leave cannot be predicted. However, it seems that, if the vote is to be a true representation of public opinion, politicians need to devote more effort to discussion of the two sides of the argument rather than simply resorting to political infighting or attacking the opposition. It remains to be seen whether Cameron, Johnson or Gove have damaged their reputations or whether they, in fact, will benefit from their respective stances. Arguably, they are all staking their careers on their positions. Nevertheless, the power to resolve this crisis remains in the hands of the people, who, in the eternal words of The Clash will be thinking on the 23rd, “Should I stay or should I go?”

Abchaps hosted two market lunch events this week, where guests were given the opportunity to discuss topics specific to the oil and gas sector and the environment in addition to a more generalist discussion on the budget broadcast Wednesday lunchtime. Abchaps also attended a Gorkana breakfast where Daniel Coatsworth editor of Shares magazine spoke about the publication’s aim to ‘empower the investor’

This week, Investec Investment Banking appointed Serge Rissi as a Director in its financial sponsor transaction group. Eversheds appointed Ian Gray as its international managing partner based in the Middle East. Howard Kennedy appointed Philip Vickery as senior associate of its business and property tax team.

Brexit – Britain’s exit from the EU

Potter down to Albion Street in Rotherhithe on Saturday for a taste of all things Nordic. The pedestrianised stretch between London’s Finnish and Norwegian churches will be lined with dozens of stalls selling Scandi snacks, crafts, homewares, jewellery and toys.

Like looking like a wally? Burn off those Saturday booze calories with the annual Where’s Wally Fun Run. Walk, jog or run the 5km or 10km course which in 2016 relocates to Clapham Common. The £22 registration fee includes your 'Where's Wally?' costume and a medal on completion and all funds raised will go to the National Literacy Trust, who will use it to help disadvantaged children learn to read and write.

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