International investors have the UK high on their radar for a new round of post-Covid investment with Welsh tech and fintech firms in a position to secure growth finance, according to the Lord Mayor of London.
On an official visit to Wales, Vincent Keaveny, said the City of London and its exchanges needed to do more to back tech and growth firms, a shift which he said is being supported by a new regulatory landscape including the lowering of the percentage of shares required to be in public hands from a flotation from 25% to 10%.
On venture capital investment appetite Mr Keaveny said there was a correlation between where investors reside and where investments are made, but that was only part of the equation.
Speaking at Tramshed Tech in Cardiff Mr Keaveny, who has an ambassadorial role in promoting the professional and financial services sector UK-wide and not just in the City of London said: “The international venture capital community does look all over the world, but at the moment it has a particular focus on the UK.”
He said that investors in Silicon Valley in particular “were very keen to get over here” since the lifting of Covid restrictions and were planning trips to the UK over the coming months.
The Lord Mayor added: “They are focused on opportunities as they feel they are a little bit out of touch. Even though there is a lot you can do online with virtual meetings and the like, it is being able to see people on the ground and getting a real sense of what the proposition is. There is a huge interest internationally in UK opportunities and given what is going on here in Cardiff and Wales generally I am sure the VCs will be on the doorstep here over the coming months and into the next year or so.”
From his perspective and that of City of London Corporation, which he leads, he said: “It is about giving a sense to potential investors, whether from the US or the Gulf for example, as to what is going on in ecosystems in places like Cardiff and Belfast. We will very often put them in touch directly with people like Fintech Wales (umbrella body for the fintech sector) so that when they turn up here they have a really worthwhile day or two, or whatever it is, to meet the sort of businesses they are interested in.”
He welcomed the decision of the Chancellor that will see the UK Government’s economic development bank, the British Business Bank, creating a specific investment fund to back Welsh firms.
While the £130m fund has yet to be launched, the chosen fund manager is expected to leverage private sector match funding finance for the fund.
Mr Keaveny said “There has certainly been big gaps in the funding mechanisms that have been available and trying to plug some of those gaps with things like the British Business Bank (Welsh fund) do help, but there will have to be private finance in there as well.”
He recognised that London and its exchanges, with the main London Stock Exchange and the Alternative Investment Market, needed to go further to provide a home for growth-focused firm, like in tech, to float rather than on rival global exchanges like Nasdaq in the US. On the public share owner reduction from a flotation, he said: “That will improve the market and the attraction of London to tech companies.
"However, I think there is a change happening anyway in the investor community and a realisation that they need to have a better understanding of growth companies as opposed to the old fashioned companies that will make up the bulk of the FTSE 100 that pay a good solid dividend every year. We haven’t been as receptive to growth companies on our exchanges to say as they are in the States, but that mindset is definitely shifting.”
He said the UK Government’s flagship levelling-up agenda wasn’t about attempting to clip the wings of the economy of London or the south-east of England. Mr Keaveny said: “It is all about growing the cake and this isn’t a London loses and everybody else wins proposition. I don’t see it like that. A lot of what we are doing at the moment is building up real centres of expertise.
" We come at that from a couple of angles, one being capital and the other skills. One of the organisations we set up in the City a couple of years ago was the Financial Services Skills Commission headed up by former Treasury minister Mark Hoban (chair). Mark and his team have been looking at financial services skills across the UK and we are very conscious that we want to be home to the best and most diverse global talent, but we also want to make sure the homegrown pipeline is there to provide the skills requirements across the country.”
A number of reports produced include a focus on re-skilling in the nations and regions of the UK. Mr Keaveny said: “That is big focus for us and particularly around clusters of expertise and working with local universities and businesses to create those really strong cultures so that you actually not only get new and younger entrants into businesses, but also really meaningful re-skilling of people transitioning from other careers, or in some cases no careers.”
The professional and financial services such is one of the fastest growing in the Welsh economy, with a workforce of around 155,000
But what of the role of AI and increasing automation in professional and financial services and the impact on jobs?
Mr Keaveny said: “I am much more optimistic about the future and still think we will need significant amounts of human input into certainly professional services in years to come. At every point in the industrial revolution people predicted the death of work and jobs, but at every point those theories proved wrong and I think we will see the same thing with AI and the industrial revolution that we living through at the moment.”
