Matt Barker

#Hargreaves_Lansdown Hargreaves Lansdown backed the £5.4 billion bid for the FTSE 100 fund manager today from a private equity consortium, a deal that will end its time as a listed company. The Bristol-based finance firm has been listed in London since 2007. It said today that the final offer valued its shares at 1140p in cash and would include a 30p per share dividend for the financial year which ended on 30 June. Compared to the Hargreaves Lansdown share price before the approach was first made in April, the price is at a premium of over 54%. The consortium is made up of CVC, Nordic Capital and ADIA. Hargreaves Lansdown is named after its founders – Peter Hargreaves and Stephen Lansdown – who set it up as an investment tip sheet. It now runs a state-of-the-art trading platform from which clients can run their own portfolios and pensions. https://lnkd.in/dKpizupy

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Thinking of securing investment, an exit or MBO involving private equity? Tom Whittard, partner at Westbridge, gave three tips in an article in Corporate Financier magazine. We discuss them in this blog - https://lnkd.in/eWKEQ5dZ How we can help: We offer comprehensive support for management teams, going beyond just the deal to help them plan, complete the transaction with a good investor and provide ongoing advisory support to deliver growth plans. Get in touch with us. #investors #privateequity #corporatefinance

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Interesting thoughts from Houlihan on Direct PE (and the maturation of the market around independent sponsors) - "global volume (will) rise from $6 billion in 2019 to an estimated $50 billion this year, with annual deal numbers tripling over that period. We’ll see over 780 transactions this year... Directs have the promise to account for half of all annual capital raised for private equity in 10–15 years." #privateequity #independentsponsors

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There has been lots written about the impact of the budget, and some names are dominating the headlines. At the smaller end of the market where YFM Equity Partners invests we can already see Entrepreneurs and Business Leaders adapting to the new normal, and most positively where there will be opportunities to grow faster. One of the things we did not expect to see so quickly is a surge in Entrepreneurs looking to do some sort of ownership change transaction, The Business Magazine - South West & West Midlands / The Business Magazine - South East covers the 300% increase in enquiries below. These enquiries are Management Teams looking to buy the businesses they run from their owners, or owners looking to de-risk themselves with some cash out now and support from a Private Equity investor.

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🏙️ Private equity this, private equity that - for this week's City Talk we're looking at a firm that's bucking the PE trend in favour of a less saturated VC market: Orrick, Herrington & Sutcliffe. Orrick has certainly seen many big wins in Europe since VC became the apple of its eye, but where does that leave its other transactional practices? Have a read of the article to find out: https://lnkd.in/ev_ZYwmW

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Best main street explanation of secondaries I’ve seen, with it taking into account the ‘what if’ of the stock market instead, and the cost of borrowing to advance short-term liquidity. Everything is cyclical, and as long as learning takes place every cycle, and contingencies evolve, I’m confident that pensions and PE will remain strong partners over the coming decades.

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Excellent that Phoenix and Schroders are partnering to create a huge new fund to channel money directly into fast growing private companies, as reported by the FT. "The world is shifting from public to private" and "The UK's private companies are an untapped universe of investment opportunity" according to Schroders CEO. This is fantastic news for the UK Middle Market space where entrepreneurialism is abundant in highly motivated Board rooms up and down the UK. Investment managers will likely struggle to generate market leading returns if the middle market space is absent from their strategy given the high growth nature of this market segment. It bodes well for middle market M&A advisors and sellers with more buyers now in town and means some niche advisors, if they haven't already, need to turn to private company advisory to remain in the game in the context of advisor consolidation over the last couple of years. #corporatefinance #investmentbanking #privateequity

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What UK sector has outperformed the Nasdaq over 1 & 3 years? The answer might surprise you when you listen to James Klempster Liontrust Asset Management PLC weekly video, as well as the answer there’s a reminder of Warren Buffet’s wise words “Price is what you pay Value is what you get!”

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There’s been significant discussion recently around the shake-up of UK local government pensions, with 86 individual pension funds consolidating their investments into 8 pools: Border to Coast, Northern, ACCESS, London, Brunel, Central, LPP, and Wales. This “shake-up” was first announced in 2015, with pooling beginning in 2018. Five pools have since established independent investment teams and could now be considered highly sophisticated LPs. These pools manage diversified portfolios of funds, co-investments, and direct investments. Some of these pools have created sub-funds; in private capital, these sub-funds often operate as internal funds of funds, with the constituent pensions acting as the LPs. One of the pools has independent governance but relies on investment consultants to support its RFPs and the selection of large separately managed accounts. The final two pools, however, appear to be lagging, with no independent team set up and investment governance still managed by joint committee (the heads of the constituent pensions). What does this mean for private capital fund managers? Generally, these larger pools of capital will write bigger tickets to larger managers. For example, since 2022 Border to Coast’s average ticket size has been ~£75 million, with the average fund size being ~£4 billion (Preqin, public filings). With more capital and sophistication comes an appetite for co-investments, secondary market transactions, and a global investment scope. The competition to access these pools will be intense, making it difficult (but not impossible) for smaller, lesser-known GPs to get a seat at the table. Please let me know if you see things differently! #privateequity #pe #fundraising #realestate #privatecapital #capitalraising #pensions #privatecredit #infrastructure #vc #venturecapital

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Important pre-announcement for Mansion House speech with the proposal to create mega pension funds. Headline is c£80bn of funds to be made available to invest in new businesses, infrastructure and local projects. Its always been bizarre that overseas funds invest more in UK infra than UK funds do and scale + attitude to risk are part of the answer. We still need to have initiatives to increase investment into UK equities, which is a core part of the flywheel to drive UK economic growth. https://lnkd.in/eT24XVMY

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The British Business Bank produced a great report last week on the performance of UK VC funds (link in comments) over the last 20+ years. As with all reports like this, it's really important to dig into the detail and not just rely on the headlines. In particular, I was keen to compare the performance of the best UK funds to those in the US. While accepting the limitations of the data (all performance data on VC is based on a very low sample size), it's still interesting to see how the UK funds in the BBB report compare to the Cambridge Associates US VC benchmarks. As you can see from the chart below, the top quartile benchmark for UK funds exceeded the US funds for the period 2002-2007. But the sample size for UK funds in this period is particularly low (eg just five funds for the 2004/05 period). Since 2008, the top quartile UK funds have underperformed the US benchmark, and since 2010 are much closer to the US median return than the upper quartile. There are some outstanding founders and companies in the UK and some strong-performing VC funds. But the reality of VC is that performance is driven by a small number of outlier investments. Without these, it's almost impossible to deliver 3x net returns to LPs. For the UK to really become competitive with the US, we need to see more UK-based companies able to scale and exit at valuations in excess of $5bn. Unfortunately, there are no easy solutions to achieving this. We consistently hear from our VC managers that there is no shortage of capital for the best UK companies. Where there is a shortage is in the number of world-class founders looking to build in the UK. Get this right and the capital (and returns) will follow.

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Howard Marks on the indispensability of risk — the risk of not taking (enough) risk Here are some of my favourite quotes from the Oaktree Capital Management, L.P.'s founder’s latest memo 📝 which got released yesterday: Relevant lessons from sports: “You miss 100% of the shots you don’t take.” – Wayne Gretzky, NHL Hall of Famer “You have to give yourself a chance to fail.” – Kenny “The Jet” Smith, two-time NBA champion . . . not having any losers isn’t a useful goal. The only sure way to achieve that is by not taking any risk. But … risk avoidance is likely to result in return avoidance. There’s such a thing as the risk of taking too little risk. The paradox of risk-taking is inescapable. You have to take it to be successful in competitive, high-aspiration arenas. But taking it doesn’t mean you’ll be successful; that’s why they call it risk. Equally paradoxical, earning a high rate of return over a long time period doesn’t have to – and usually doesn’t – connote a record of consistent success. More often it results from having made a lot of well-reasoned investments, some subset of which worked out well. Here’s how I described the basis for the success of Berkshire Hathaway: I believe the ingredients of Warren [Buffett]’s and Charlie [Munger]’s great performance are simple: (a) a lot of investments in which they did decently, (b) a relatively small number of big winners that they invested in heavily and held for decades, and (c) relatively few big losers. No one should expect to have – or expect their money managers to have – all big winners and no losers. Investors must accept that success is likely to stem from making a large number of investments, all of which you make because you expect them to succeed, but some portion of which you know won’t. You have to take a shot. Not every effort will be rewarded with high returns, but hopefully enough will do so to produce success over the long term. That success will ultimately be a function of the ratio of winners to losers, and of the magnitude of the losses relative to the gains. But refusal to take risk in this process is unlikely to get you where you want to go. Taking a chance doesn’t mean there will be a successful outcome, nor does it require it. If the reasons are sound, the risk should be taken almost reflexively. The more often we trust our judgment, the more confidence we gain in our decision-making capacity. The courage to take risks becomes a worthwhile end in itself. ➡️The bottom line on the quest for superior investment returns is clear: You shouldn’t expect to make money without bearing risk, but you shouldn’t expect to make money just for taking risk. You have to sacrifice certainty, but it has to be done skillfully and intelligently, and with emotion under control. (+++Opinions are my own. Not investment advice. Do your own research.+++) #markets #investing #money #wealthmanagement Tap the bell 🔔 to subscribe to my profile & you'll be notified when I post. 💸

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#Budget follow & subscribe for more. #PE #PrivateEquity #Alternatives #Capitalgainstax #Taxation #labour #carriedinterest #news #newsletter #PrivateMarkets #Future

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Thank you to The Times and Richard Fletcher for publishing my thoughts today on the Global Investment Summit which Keir Starmer and Rt Hon Rachel Reeves Reeves will host next month. I believe the Summit represents a golden opportunity not only to attract investment but to reset the UK's relationship with investing and (sensible) risk taking. About two thirds of US adults have made equity investments whilst, in the U.K., less than a quarter say they have done so. By introducing measures which have been tabled by the financial industry - such as scrapping stamp duty on shares, launching a "British ISA" or bringing in tax breaks for pension assets - the Government can make a real statement of intent and encourage a healthier investment culture which should benefit households, the economy and U.K. plc in the long term. Having committed to being the party of growth and wealth creation, they must decide whether they want the flagship event to be a feel-good PR exercise or a catalyst for genuine progress. https://lnkd.in/eBusTAn6

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💸SI Partners Global has been predicting a big year for Private Equity exits💸 Friday’s announcement of OakNorth Bank and HSBC’s investment into Croud is an unexpected move; why is a PE-backed company 5 years into an investment cycle using bank debt to fund their next phase of growth? 🤔 2019 was a tipping point for PE investment in the marketing services sector – some ~£26bn across digital agencies and tech consultancies (42%), marketing services (41%) and strategic consulting (24%).    The majority of these investments (70%+) include a buy-and-build strategy to generate the returns required, and our research shows that on average PE sponsors hold for 5 years in this space.    But – the market faltered in 2023, as broader economic challenges made it difficult for sellers to exit at their expected valuations. Many saw their performance impacted by reduced client spends and this has been compounded by the increasing cost of capital from higher interest rates. Both made it more challenging to reach their valuation targets. 🎻 📉   An added complexity here is that over the last few years PE funds have been willing to apply comparatively high valuations versus the long-term averages in the sector – and which have been consistently applied by the established corporate buyers. Funds justify this on the basis that their minimum level of return is well-protected, so much of the future risk sits with management shareholders who get comfortable with it due to the generous level of cash-out they received on day one.   But at some point there needs to be another pay-day. And unlike listed companies that have a transparent share value over time, PE-backed businesses define their own internal valuation, which is used to incentivise up-and-coming management through ‘sweet equity’ and the like.   As a result, high value expectations are effectively embedded in the structure and required for an exit to make sense – especially for management sellers. But most corporate buyers are trading at lower multiples than these PE-backed groups are applying to themselves, and higher interest rates are impacting valuations for secondary investments that require more leverage.  📈 ✋🏻 🛑 So despite plenty of demand in the market from both corporate and Private Equity buyers, prices that were effectively set at the peak of the market are proving to be an obstacle to in today’s market.   Could this explain why Croud opted for bank debt to fund further expansion rather than refinancing with another fund or selling to a strategic buyer? Quite possibly.    Croud has shown strong growth but has made only a few, relatively small acquisitions since LDC invested. Having tested their value in the market, perhaps they’ve concluded that their best option is to double down on growth through M&A as an interim step until they can find the price they want. 

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Great to be able to contribute to this interesting piece on UK markets by David Craik at interactive investor. We’re continuing to see enormous amounts of value in the UK at BRI Wealth Management plc, especially in the mid and small cap end of the market. Investment trusts look even better value! #UKplc #investing #investmenttrusts

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🤝 Meet the Funder 🤝 🔹 Is Debt or Equity the best choice for my business? 🔹 How do I fund growth? 🔹 What is debt funding? If you need answers to these questions, book a slot with one of our investment experts today. We are one of the UK's most active investors, passionate about powering growth, and have 7️⃣ new hosts available and ready to take your booking ⏬ #MeetTheFunder #Investment #Debt #Equity #Scale #QuestionTime

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“The Great British Buyout” can’t come fast or strong enough. Corporate brokers don’t like it, because it reduces their client count, and non-executive directors, who typically own almost no shares in the companies they serve, don’t like it because it’s the end of their free lunch. But it’s the only way to snap #UK #markets out of their malaise. #investing #shareholderactivism #privateequity

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