LONDON’S BUSINESS NEWSPAPER
THE NOTEBOOK VICTORIA SCHOLAR’S TAKE ON TODAY’S BIGGEST BUSINESS STORIES P13
UK VENTURE CASH SET TO PULL BACK TUESDAY 27 JUNE 2023
ISSUE 4,002
OPINION WHY OUSTING PUTIN IS UNLIKELY TO END THE WAR P17
CITYAM.COM
FREE
ON THE MOVE HSBC set to leave Canary Wharf skyscraper in 2026
SCALE-UPS COULD BE AT RISK OF INVESTMENT DROUGHT CHARLIE CONCHIE VENTURE capital investors are bracing for a “real toughy” of a year ahead as further rate hikes from the Bank of England choke off the flow of cash into the sector, analysts have warned. UK venture investment plunged 25 per cent to $31bn (£24bn) last year as soaring inflation and rising interest rates roiled markets and ramped up the cost of cash. Investors and analysts had been hoping for a rebound in the second half of this year but the resurgence looks set to be scuppered by a period of longer interest rate pain in the UK. Henry Whorwood, head of research at investment analysis firm Beauhurst, said the latest hike by the Bank of England would force VC fund’s big investors – their LPs – to shift their cash elsewhere.
“This will take a while to trickle through to GPs [venture fund managers] as a whole, although they’ll all be well aware of it looming, and GPs raising [money] will be feeling it at the moment,” he told City A.M. Whorwood added that the sector would rely on private equity funds pouring in but it “could be a real toughy” of a year if they choose to sit on their cash. London suffered a shallower drop-off than many European capitals last year amid a wider global slowdown in start-up funding. The capital retained its top spot in Europe with $22bn in funding, more than double the $11bn bagged by second place Paris, according to Dealroom. However, analysts at Pitchbook told City A.M. that VC deal activity in the UK and Ireland in the first half of the
year was tracking at 52 per cent below 2022 levels and would “remain muted” until at least December. The higher cost of cash has already forced some high profile firms globally to suffer major ‘down rounds’ over the past year, with Klarna among the big name firms to suffer a major valuation cut. Michael Moore [pictured], CEO of the British Venture Capital Association, told City A.M. that interest rates this year will “have an impact across the economy” but the sector would weather the storm. “Private capital funds are patient investors and often have the flexibility to ride out short to medium-term uncertainty, but we need to ensure the conditions for investment are right,” he said. “As times get tougher, reforms to pensions, certainty on tax incentives for research and venture investment become even more important.”
CHRIS DORRELL HSBC IS abandoning Canary Wharf to return to the Square Mile, ditching its skyscraper in E14 in favour of a smaller office back in the City. The bank left its Poultry HQ for the Canary Wharf location some twenty years ago, and will not be moving out until 2026. HSBC has been on the lookout for a smaller space since the emergence of
hybrid working, with CEO Noel Quinn a notable public proponent of more flexible working. The move will be seen as a blow to the Docklands hub, though the Canary Wharf Group is already engaged in a reinvention of the area away from a purely financial hub to a mixed-use development. The HSBC tower itself is owned by Qatar’s sovereign wealth fund, who bought it for £1.1bn in 2014.
UK media market remains head and shoulders above European competition JESS JONES THE UK’s entertainment and media market is expected to hit revenues of £100bn by 2027, according to PwC’s latest forecast. The accounting firm's Global Entertainment & Media (E&M) Outlook 2023-2027 also expects the
UK to cling onto its top position in Europe as the leading E&M market over the next four years. The E&M Outlook predicted the main influences driving the revenue will be internet advertising, virtual and augmented reality, and home and mobile internet spending. Digital advertising, particularly
internet advertising, is expected to capture the majority of advertising revenue, while TV advertising faces more challenging circumstances. Traditional parts of the entertainment and media industry are also set for a rebound. Cinema and out-of-home advertising are expected to
return to pre-Covid revenue levels, indicating postpandemic recovery and growth. Elton John and other stars have proven a hit for UK GDP
Partner at PwC Strategy& Dan Bunyan said “the internet advertising sector remains highly dynamic”. Expenditure is shifting towards emerging channels like retail media and gaming, as brands reevaluate for the “most fruitful” ways of engaging online audiences, Bunyan said.
INSIDE ASTON MARTIN PRIMED TO MAKE ‘ULTRA-LUXURY’ EVS P3 FOOD INFLATION STARTS TO EASE P6 AMTE POWER RUNNING OUT OF BATTERY P10 MARKETS P14 SPORT P19