Fintech

London’s IPO share has fallen to its lowest point in decades and Fintech CEOs are not happy: ‘Companies have just moved their business elsewhere’

Published

9 months ago

15 July, 2024

London's IPO share has fallen to its lowest point in decades and Fintech CEOs are not happy: 'Companies have just moved their business elsewhere'

The chief executives of some of the biggest private financial technology companies are pushing for bolder reforms to the UK’s listing rules, saying the overhaul announced this week is not enough to revive share offerings in London.

Increased research incentives, better policies to attract global talent, and a favorable tax regime that supports employee stock options are among the measures that could help “solidify London’s status as a world-class listing hub,” said Paul Taylor, CEO of banking software firm Thought Machine. Others such as Jaidev Janardana, CEO of SoftBank-backed Zopa Bank, have called for a broader range of investors.

Their comments came in response to new rules for initial public offerings revealed From United Kingdom Financial Conduct Authority on July 11 as part of a concerted effort to revive an equity capital market that has been moribund for years.

The UK’s share of new deals in Europe fell to 2% in May, its lowest level in decades, amid a global deal drought, although London remains the continent’s main IPO venue. A recovery It could take monthsas investors await clarity on the policies of the new Labour government led by Prime Minister Keir Starmer.

The FCA’s revised rules will allow companies to conduct more activities without submitting them to a vote of shareholders. They also make it easier for companies to have two classes of shares, a structure often favored by entrepreneurs or early-stage investors who want to have a significant stake in companies even after they go public.

“Less expensive”

Some of the fintechs and startups planning to go public are looking for more flexible rules and a more favorable environment sooner or later.

Rishi Khosla, CEO of OakNorth Bank, a lender for small and medium-sized businesses, said policymakers needed to look at the factors driving higher “price multiple” premiums in the US and adapt them to the UK.

“They could also look at how to make the first two years less onerous for new IPOs, so companies can adjust to life as a listed company,” Khosla said.

Meanwhile, Zopa’s Janardana, whose preferred option is to list in the UK, has called for greater participation from large institutional investors such as pension funds and sovereign wealth funds to improve “depth of capital”.

The FCA has proposed rewriting listing rules in May 2023 amid heated debate over London’s future, sparked by Cambridge-based technology firm Arm Holdings Plc’s decision to list in the United States. London has largely lost ground to New York in recent months as the preferred listing choice for Swedish buy-now-pay-later firm Klarna Bank AB.

The co-founders of Revolut Ltd., a fintech eyeing a valuation of more than $40 billion, launched a scathing attack on the U.K.’s regulatory regime in 2023, saying they would not consider listing in London. A year later, the company appears to have softened its stance. Its U.K. CEO Francesca Carlesi suggested in March that London remains on their radar for an IPO, though she cautioned that Paris and New York were competing to host promising financial startups.

“We do not believe that business as usual is an option,” the FCA said in a policy statement. The new rules were a first step towards “reinvigorating” the UK’s capital markets, Chancellor of the Exchequer Rachel Reeves said.

Weakening of protections

Some were disappointed by the changes for a different reason. Railpen, which manages about £34 billion ($44 billion) of assets for the 350,000 members of rail pension pools, said the FCA’s move had undermined investor protections.

Others said regulators needed to stay bold. The government “in general should work to make the market more competitive” on issues such as stamp duty, executive pay and more pension funds investing in UK stocks, said Claire Keast-Butler, a partner at law firm Cooley, which specialises in capital markets transactions.

But the UK market faces a tough challenge in trying to turn the tide. The number of companies listed in the country has fallen by around 40% since its recent peak in 2008, according to the UK Listing Review. Data shows that the UK accounted for just 5% of global IPOs between 2015 and 2020.

David JarvisCEO and founder of a London-based fintech company offering banking as a service Griffinsaid the FCA’s move was “extremely encouraging”, adding that he expected it to bring “some dynamism” back to London markets.

“The status quo hasn’t led to anything: companies have simply moved their business elsewhere,” he said. “Companies prefer to list in their home markets.”

The UK should scrap stamp duty on shares traded on the main market, bringing it into line with the US, said Philip Belamant, CEO and co-founder of Zilch Technology. Serial entrepreneurs should be encouraged by increasing the so-called Incentives for the transfer of company assets on the proceeds from the IPO being reinvested in their next UK venture, he said.

In recent years, the fintech sector, which accounts for half of all UK unicorn companies, has seen reduced investment and increased global competition.

Janine Hirt, CEO of Innovate Finance, called on Starmer’s government to commit to delivering the Mansion House Reforms aimed at encouraging pension funds to increase investment in local assets “to increase access to growth capital”.

“The UK has a window of opportunity to move forward that it cannot afford to miss,” he said.

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Fintech

Lloyds and Nationwide invest in Scottish fintech AI Aveni

Published

9 months ago

29 July, 2024

FinCrypto Staff

Lloyds and Nationwide invest in Scottish AI fintech Aveni

Lloyds Banking Group and Nationwide have joined an £11m Series A funding round in Scottish artificial intelligence fintech Aveni.

The investment is led by Puma Private Equity with additional participation from Par Equity.

Aveni creates AI products specifically designed to streamline workflows in the financial services industry by analyzing documents and meetings across a range of operational functions, with a focus on financial advisory services and consumer compliance.

The cash injection will help fund the development of a new product, FinLLM, a large-scale language model created specifically for the financial sector in partnership with Lloyds and Nationwide.

Joseph Twigg, CEO of Aveni, explains: “The financial services industry doesn’t need AI models that can quote Shakespeare, it needs AI models that offer transparency, trust and, most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, vetted by financial services experts for specific financial services use cases.

“FinLLM’s goal is to set a new standard for the controlled, responsible and ethical adoption of generative AI, outperforming all other generic models in our selected financial services use cases.”

Robin Scher, head of fintech investment at Lloyds Banking Group, says the development programme offers a “massive opportunity” for the financial services industry by streamlining operations and improving customer experience.

“We look forward to supporting Aveni’s growth as we invest in their vision of developing FinLLM together with partners. Our collaboration aims to establish Aveni as a forerunner in AI adoption in the industry, while maintaining a focus on responsible use and customer centricity,” he said.

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Fintech

Fairexpay: Risk consultancy White Matter Advisory acquires 90% stake in fintech Fairexpay

Published

9 months ago

29 July, 2024

FinCrypto Staff

Treasury Risk Consulting Firm White Matter Alert On Monday he announced the acquisition of a 90% stake in the fintech startup Fair payment for an undisclosed amount. The acquisition will help White Matter Advisory expand its portfolio in the area of cross-border remittance and fundraising services, a statement said. White Matter Advisory, which operates under the name SaveDesk (White Matter Advisory India Pvt Ltd), is engaged in the treasury risk advisory business. It oversees funds under management (FUM) totaling $8 billion, offering advisory services to a wide range of clients.

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White Matter Advisory, based in Bangalore, helps companies navigate the complexities of treasury and risk management.

Fairexpay, authorised by the Reserve Bank of India (RBI) under Cohort 2 of the Liberalised Remittance Scheme (LRS) Regulatory Sandbox, boasts features such as best-in-class exchange rates, 24-hour processing times and full security compliance.

“With this acquisition, White Matter Advisory will leverage Fairexpay’s advanced technology platform and regulatory approvals to enhance its services to its clients,” the release reads.

The integration of Fairexpay’s capabilities should provide White Matter Advisory with a competitive advantage in the cross-border remittance and fundraising market, he added.

The release also states that by integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.

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Fintech

Rakuten Delays FinTech Business Reorganization to 2025

Published

9 months ago

29 July, 2024

FinCrypto Staff

Rakuten (Japan:4755) has released an update.

Rakuten Group, Inc. and Rakuten Bank, Ltd. announced a delay in the reorganization of Rakuten’s FinTech Business, moving the target date from October 2024 to January 2025. The delay is to allow for a more comprehensive review, taking into account regulatory, shareholder interests and the group’s optimal structure for growth. There are no anticipated changes to Rakuten Bank’s reorganization objectives, structure or listing status outside of the revised timeline.

For more insights on JP:4755 stock, check out TipRanks Stock Analysis Page.

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Fintech

White Matter Advisory Acquires 90% Stake in Fintech Startup Fairexpay

Published

9 months ago

29 July, 2024

FinCrypto Staff

White Matter Advisory Acquires 90% Stake in Fintech Startup Fairexpay

You are reading Entrepreneur India, an international franchise of Entrepreneur Media.

White Matter Advisory, which operates under the name SaveDesk in India, has announced that it is acquiring a 90% stake in fintech startup Fairexpay for an undisclosed amount.

This strategic move aims to strengthen White Matter Advisory’s portfolio in cross-border remittance and fundraising services.

By integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.

White Matter Advisory, known for its treasury risk advisory services, manages funds under management (FUM) totaling USD 8 billion.

Founded by Bhaskar Saravana, Saurabh Jain, Kranthi Reddy and Piuesh Daga, White Matter Advisory helps companies effectively manage the complexities of treasury and risk management.

The SaveDesk platform offering includes a SaaS-based FX market data platform with real-time feeds for over 100 currencies, bank cost optimization services, customized treasury risk management solutions, and compliance guidance for the Foreign Exchange Management Act (FEMA) and other trade regulations.

Fairexpay is a global aggregation platform offering competitive currency exchange rates from numerous exchange partners worldwide. Catering to both private and corporate customers, Fairexpay provides seamless money transfer solutions for education, travel and immigration, as well as simplifying cross-border payments via API and white-label solutions for businesses. Key features include competitive currency exchange rates, 24-hour processing times, extensive currency coverage of over 30 currencies in more than 200 countries, and secure, RBI-compliant transactions.

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