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Investment In UK Tech Passes £10bn For First Time

Posted-on January 2020 By Cat Rutter Pooley

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Is the British tech scene finally catching up?

Investment in UK-based tech start-ups surpassed £10bn for the first time last year- up 44 per cent from 2018 and more than France and Germany combined, according to research from Dealroom and Tech Nation.

Meanwhile blow-ups like WeWork could dampen enthusiasm for the much-larger US tech start-up industry.
We've loved this article by Cat Rutter Pooley, who touches upon the relative position of the UK tech scene in comparison to the rest of the European market.

'A booming tech industry could in time help revitalise subdued IPO markets in both the UK and Europe. But while there have been some European tech successes in recent years (Spotify and payments group Adyen were high profile 2018 listings), start-ups flush with cash are staying private for longer. Fintechs such as Revolut, Monzo and TransferWise have attracted plenty of funds in the private market. That gives little comfort to IPO bankers. And a rush of cash to UK tech scene creates a new problem: is WeWork-style valuation inflation also heading over here?

Briefly

Tullow Oil piled disappointment on disappointment when it slashed production forecasts, axed its chief executive and scrapped its dividend in December. More follows on Wednesday. The oil and gas explorer warns of pre-tax write-offs of $1.5bn in its 2019 results after cutting its oil price forecast by $10 a barrel to $65pbl and reducing its reserves estimate. Total revenues for last year will be around $1.7bn and gross profit $700m.

Persimmon is the latest of the housebuilders to report after Taylor Wimpey on Tuesday. Completions fell 4 per cent last year and revenues 2.4 per cent (to £3.7bn) as the group has prioritised improving quality over sales volumes. Selling prices were steady. Housebuilders stand to be one of the biggest beneficiaries of political stability, but it is still too early to see the general election effect in results. Persimmon will give a 2020 housing market outlook update next month.

Finally subprime lender Provident Financial also has an update out. Its credit card arm Vanquis Bank delivered results “modestly above expectations due to favourable delinquency and tight cost control”. Its car finance unit Moneybarn did modestly worse because of higher impairments. Profits for 2019 should be in line with market expectations of £155-£166m.

Job moves

Telecoms group Liberty Global has appointed Severina Pascu as chief financial officer and deputy chief executive of Virgin Media. The move is part of an overhaul of the UK broadband company, and comes at a critical time for the business (more on that here). Ms Pascu is a former banker who has headed Liberty’s Swiss cable business UPC since 2018.

EY UK needs a new managing partner. Steve Varley, chairman and managing partner for the past nine years, is stepping back from day-to-day management to take on a new global role. Full story is here.

Beyond the Square Mile

JPMorgan Chase unveiled its strongest annual profitability since before the financial crisis, boosted by a vigorous rebound in trading revenues in the final three months of the year. Citigroup and Wells Fargo also had results out, kicking-off earnings season. Lex explains JPMorgan’s surge in profitability while Due Diligence, our M&A newsletter, looks at what’s next for the US bank and its inimitable CEO Jamie Dimon (pictured above).

Boeing ceded the crown as the world’s biggest plane maker last year to rival Airbus as it struggled to contain the fallout from its troubled 737 Max passenger jet. The US aircraft maker received new orders for 246 aircraft in 2019 — the lowest number in at least two decades — which fell to a negative 87 after cancellations. Deliveries of 380 were down by more than half on 2018’s 806, and the lowest since 2008. Before the grounding of the 737 Max, Boeing had been predicting deliveries of between 895 and 905 commercial jets for 2019.

Tesla’s soaring share price has put Elon Muskwithin touching distance of the first tranche of a $50bn incentive package designed to keep him at the helm of the electric car maker. The company’s shares gained 2.5 per cent on Tuesday, closing in on $538 a share, valuing its equity at $97bn. If the stock reaches $554.80, Tesla would hit a valuation of $100bn. If it holds that level for six months, it would unlock the first of several potential share-based payments to Mr Musk, worth just under $350m. To unlock the full $50bn by 2028, however, Mr Musk would have to increase Tesla’s annual revenues to $175bn, from about $24bn today, as well as raise underlying earnings to $14bn, from about $2bn today, and its market cap to $650bn.

Closing quote — essential comment before you go

Jonathan Guthrie Passive fund management is a big success built on a big fallacy. It has created an industry that has hitched a lucrative free ride on the backs of stock pickers and will soon face the issue that confronts all titans: their outsized impact on business and society.

Edwin Heathcote The very particular mix of blood, drink and sweat found at Smithfield Market is essential to London’s survival as something more than a tourist simulacrum of a real city.'

This article was written by Cat Rutter Pooley and published on FT.com.

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