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Camden Associates was founded 11 years ago with the objective to capitalise on overlooked opportunities in the financing markets. At that point, a lot of the traditional banks were pursuing large deals, paying no attention to the needs of smaller companies.  As a chartered financial analyst, Jean-Claude Gonneau has  been active in the field of emerging growth companies for years. Former banker at Donaldson Lufkin and Jenrette and General Manager of SG Cowen Europe - this is a space Jean-Claude knows well. Here he shares his insights with Finance Monthly.

 

What has been happening with Camden Associates since we last spoke in 2016? Are there any recent project or major milestones that you’d like to share with us?

2017 has been a very busy year for us with some major pieces of business done. As an international firm, we have scored closing one major deal, seeing a private equity fund taking 52% of the capital of one of our historic client, a real estate developer. We have been faced with some complicated transactions, which have however been highly satisfying as well.

At the moment, we are also in the final stages of the sale of a Ghana-based mining company to eastern investors. As expected, the mining sector is gathering steam and we have been active with two TSX-V listed mining companies. Finally, we are acting for a listed Canadian medical cannabis company. This definitely keeps us busy.

 

How has the mid-market sector fared in the past year ?

Things started quickly in January 2017 and have stayed very stable since then. As far as we can judge at this point, it is likely that 2018 will follow that trend, barring any unforeseen event.

 

What have been the issues that your clients face in relation to fund raising and project finance ?

The volume of new regulations just does not abate and is seriously harming international financing flows. As of 3 January 2018, MIFID II will add to the maze of new regulations that are meant to protect investors. Unfortunately, people creating these regulations have little to no idea about the final consequences of these new regulations. It seems likely that very large international banks will manage to adapt, but, in my opinion, it is medium-sized players that will be affected.

 

What are the issues that your clients face in relation to fund raising and project finance?

The evolution of the last few years shows that regional regulations are going in opposite directions with the effect of gradually closing markets.

European investors have rarely showed as little appetite as they currently have  for American companies. This is largely due to new European regulations, but also due to a gradual lack of interest and understanding. Aside from the UK,  European investors are shying away from the mining sector. A limited number of  investors in Europe understand the gradual legalisation of cannabis in the US and Canada and its massive financial implications. What this means is that fund raising and project financing tend to operate on a regional basis. From our point of view, having  a fairly strong international reach tends to help us to some extent, but it’s not a situtation one can really rejoice about.

 

What lies on the horizon for you and Camden Associates in 2018?

Camden is a specialised investment firm. We have positioned ourselves for trends which are starting to materialize. We do not think much further than that. We have to do our best for clients who have put their trust in us.  We are very busy at present and our book is still pretty full.

I can’t predict anything going forward, as you need to work as hard for a deal that fails as for a deal that works. Simply put, it seems that the only certainty is that working hard is the order of the day and that of next year. As for success – only time will tell.

 

What differentiates Camden Associates from other investment firms?

We work with our clients as partners. Without proper and effective communication, there cannot be a successful financing. We constantly interface with potential investors and provide feedback to our clients. The feedback from the markets when it comes to valuation is not necessarily well received, but we believe that honesty rhymes with integrity. Our constant interaction with the buy-side allows us to provide our clients with company-specific or situation-specific IR execution, which integrates with capital markets strategies and planning.

 

Website : http://www.camdenassociates.co.uk/

 

Finance Monthly speaks to lawyer Rona Kaspi about trends within Maritime Law.

 

What’s your general opinion on the current position of vessel financing environment realized since 2008?

The maritime sector is one of the sectors affected by the global crisis after 2008. The global crisis started a chain reaction causing a constriction in trade, resulting in a negative impact on both the shipping and banking sectors, which, in turn, had adverse effects on the rapid financing of the maritime sector. The maritime sector, which takes up little space on their balance sheets, has become a sector that larger banks, and, in particular European banks, want to exclude from their portfolios due to the losses it causes them. Other than a few banks that have the expertise and are efficient in the maritime field, several German banks that do not consider maritime clients as their target audience made the decision to withdraw entirely from the maritime sector, especially in Turkey. They have chosen to transfer the credits to third parties by giving 30-40% discounts on the debt amount of the principal, for the sole purpose of removing it from their balance sheets. While executing such transfers, the loan repayment performance of the indebted companies have not been considered. They removed the companies that do not have other source of income and are not managed in a professional manner and have limited the number of vessels in their portfolio.

 

After the unfavorable market in 2016, improvement in the sector is being projected by ship owners and shipyards in 2017 onwards. What is your opinion on this? Where do you think the financial opportunities will come from?

2015 was quite fruitful for tanker owners but, as mentioned, 2016 was not a productive year. Currently, the conditions for dry cargo and tanker markets look positive and I can confidently say that Turkey has a very influential position in the region in relation to shipyards.

It is impossible to find availability repair and docking services at the shipyards. This is an indicator of the success of the services provided by the shipyards in the region.

However, the maritime sector is no longer a primary sector whose investment is supported by European Banks, neither in relation to ship owners nor to shipyards. The rapid fluctuations caused a disincentive to banks which would be interested in earning money in a short period of time through high interest rates expected for a limited number of banks. The European Banks consider the labor force used in relation to maritime loans under €20 million as unproductive. Additionally, banks prefer giving loans to holding companies that have a more professional administration structure to family companies. Due to this, it would not be easy for Turkish ship owners and shipyards to find foreign financing. On the other hand, local banks continue to actively provide a support to the maritime sector. However, during client selection, the local banks consider not only the financing of the vessel, but also the previous loan transactions of their clients and their relationship with the banks during the previous crisis period.

Today, firms which continued their activities find themselves to be grateful to the local banks that supported them during the financial crisis. This has changed the sectorial companies’ opinion on the banks. Although local banks offer higher interest rates when compared to foreign banks, they now have more customers in the sector due to the support they’ve offered to their clients. Local banks will continue to provide their financial support, however, access to foreign financing sources will gradually become difficult.

 

What is the risk perception in respect of maritime assets and, among others, are there any less-risky vessel types? How eager are the banks to take maritime investment risks?

While the foreign finance institutions make sector assessments for long terms, local finance institutions offer lending for smaller amounts and shorter terms. Foreign finance institutions prefer providing funds to the publicly-traded firms or maritime companies, rather than financing an individual vessel.

 

Before the 2008 crisis, when the market was at its best, financing of general cargo vessels was as common as financing larger ships. Perhaps this has deteriorated more rapidly after the crisis, in comparison with other vessel types. Is it likely that the banks specialised in global vessel financing may again show such an interest in the short and medium term? How accessible would financing be for small vessels and ship owners?

As far as local banks are concerned, coaster-style small vessels will always continue to be attractive to them, however, they are out of the scope for foreign banks. In my opinion, local banks will continue to finance coasters by taking additional guarantees, such as maritime hypothecation.

 

In this context, how risky are the short-distance sea transports and general cargo vessels, according to banks?

Local banks will always deal with local trade. Nevertheless, there will always be requests for additional guarantees. Most of the local banks do not consider the clients they finance as business partners and they do not consider vessel loan transactions as project financing – to them, this is asset financing. Hence, this always necessitates additional guarantee requests that are not ship mortgages.

 

Have European banks overcome the crisis or are there any new mergers and consolidations in the future?

As far as European Banks are concerned, the issue is not restricted only to a maritime crisis. Actually, one of the reasons behind the crisis in the maritime sector is the global banking crisis. Many banks leave the maritime sector, make major discounts on their credits, sell the credit or pressuring their clients to settle the loan, as they’re not familiar with maritime market and they don’t have control over the market. Although the risks are generally small, maritime creates significant issues in the balance sheets of foreign banks. Overall, banks are doing well and I don’t think that they will be faced with any unfortunate surprises in the near future.

 

The vessel prices reached rock bottom, which presents a great opportunity for the ship owners who would like to enlarge their fleets. On the other hand, financing opportunities are very scarce too. So much that, even if there are financial means, it is not possible for some vessels to generate enough daily revenue to make the repayments in the current markets. In this regard, would it be less risky for the banks if they finance the vessel purchases at the current lower prices with more convenient payment conditions and then increase the repayments when the vessel prices increase?

The developments in our maritime sector gained momentum after 1995, but real growth was achieved in the beginning of 2000s, due to the involvement of foreign banks.

During those years, banks and finance institutions played a great role both in the second-hand market and in supporting the construction of new ships. However, when we’re in foreign countries, we see companies making continuous investments to the maritime sector. It is not possible to reach a strong capital structure within a short period of time. Although rapid growth seems attractive to people, the status of the companies that do not have the adequate capital structure to overcome the crisis will always be a danger. In the maritime field, the most impossible situation can be encountered. It is vital to ensure that your company has a strong capital at all times to take the necessary measures and be able to position itself in the event of a crisis. Instead of targeting a rapid growth for their companies in the short run, the partners of the company should target a company structure, which is managed professionally, maintains the speed of growth within the frame of a specific plan and ensures survival by relying on its strong capital structure in case of a risk. A consistent growth should be targeted; our recent experiences showed us that a rapid rise might lead to a sharp decline.

 

Finally, we are all aware that standards such as Basel 3, which require greater transparency, have been introduced. In this respect, what are your suggestions to the Turkish ship owners about the transparency requirements that need to be satisfied by banks in the future?

First of all, they must ensure a more professional administrative structure. Many banks have actually witnessed the problems which occurred in family companies. Having witnessed issues resulting from family-related problems, banks which previously had a large number of clients in Turkey have now stopped to gravitate towards the country. Family members can be the partners of the company but their personal issues should not affect the daily business of the company. Besides, transparency in the capital structure is also required. Evidence about the source of the capital should be made available. Now there is no off-the books money. The companies should be professionally managed, their accounts should be audited and the audit reports should be submitted to the banks regularly. Today, the application forms of the banks that needs to be filled by standard clients require the name of the audit firms and lawyers. Refraining from auditing may result in saving a small amount, but it is important to mention that the companies that submit regular audit reports have better reputation in the eyes of banks.

 

Website: http://www.aktlaw.com

Cornelia Ritz Bossicard is the Founder and Managing Partner of 2bridge AG - a sparring partner for corporate governance with the aim to build bridges between stakeholders. She serves on a variety of Boards of multinational companies and chairs the Audit Committee of a retail and food company listed on the Swiss stock exchange.

Prior to founding 2bridge AG, Cornelia had worked as an auditor and senior advisor with one of the Big Four accounting firms, both in Switzerland and the Silicon Valley. Cornelia has over 22 years of international experience as Director and senior advisor to executives and board members of companies ranging from start-ups to multibillion-dollar multinationals in the technology, industrial products, retail and consumer, wholesale, and professional services industries. Finance Monthly speaks to her about her company 2bridge AG and current trends in corporate governance.

 

Can you tell us a bit about 2bridge AG?

2bridge AG is a sparring partner for corporate governance with the aim to build bridges between stakeholders.

On the one hand, we act as independent sparring partner for investors, board members and executive management, on the other hand we passionately share our experience through lectures and workshops.

2bridge AG is based in Switzerland and focuses on companies in industries where we have extensive international experience, namely technology, retail and wholesale, food, industrial production, and professional services.

 

What do you mean by “sparring partner for corporate governance”?

Most of the investors, board members and executives I work with are well educated on corporate governance and have lead companies successfully in the past. My role is to support them navigate through the maze of information and options, help align stakeholder interests and provide them with an independent point of view on how to tailor their organizations’ corporate governance to the changing environment and to stay fit for the future.

 

What’s the history behind 2bridge AG?

Building bridges has always been one of my passions. I contemplated studying civil engineering to build bridges between valleys, but then decided to study business administration to build bridges between people.

Two years ago, I decided to realize my entrepreneurial aspirations and to set up my own company. The name, 2bridge reflects well what is important to me and my conviction in companies performing better when people work together towards a common goal.

 

Can you share some trends you see in corporate governance?

It is becoming more complex for investors, boards of directors, and executives to stay agile in the market and navigate their organizations through uncertain and dynamic times.

Today, tried-and-tested business models are suddenly disrupted; markets and competition are becoming more digital and global.

For example, Artificial intelligence (AI) as 'predicting machines' coupled with human judgment will lead to quicker and smarter decision making at a lower cost. It is not a question if AI tools will enable enhanced performance against strategy and lead to a change in strategy, but when they will do so and to what extent.

As a result, new skills and a more dynamic and iterative strategy and risk management process are required.

Good corporate governance becomes increasingly important for building trust. It is not only important what companies do but also why and how they do it. As studies show, trust drives value and investment decisions. Therefore investors and other stakeholders do pay more attention to corporate governance.

Corporate governance is sometimes perceived to be limited to compliance, as there is a number of applicable legislation, regulation, voluntary commitments and business practices. I often hear from board members that most time is spent on compliance matters and that there is not much room for strategy and other important discussions. Compliance is important, but it is the role of the chair to set a balanced agenda to mitigate risks and take advantage of opportunities.

 

How has your former auditor’s background prepared you for your current role?

My years as Audit Director and Senior Advisor with one of the Big Four accounting firms have taught me the importance of being a sparring partner and trusted advisor to my clients. Over the years, I gained extensive experience in financial reporting, mergers and acquisitions, risk management, financing, audits and corporate governance. In addition to my financial expertise, I built a broad, global retail, technology and industrial experience, international market know how and strive to continuously learn and improve.

 

As Henry Ford said, ‘Coming together is the beginning; keeping together is progress; working together is success.’

 

Contact details:

Website: www.2bridge.partners

Email: info@2bridge.partners

 

Yesterday saw Chancellor Phillip Hammond deliver his second budget.  While the abolition of Stamp Duty, several tax revisions, freezes on several duties, increased investment in AI and Technology and a £3 billion investment into the NHS all came as welcome additions they could not prevent a sharp drop in the UK Growth Forecast following the budget.

So with many experts labelling it a ‘make or break’ moment for Hammond and a somewhat beleaguered Government, we spoke to the industry experts to see what the Autumn budget really means for the Financial Sector in a special extended Your Thoughts: Autumn Budget 2017

Choose your sector below or scroll through to read all the insight.

FinTech & Digital
UK Growth, Investment & Forex
Tax
Healthcare & Retail
Property & Real Estate

 

FinTech & Digital

 

Abe Smith, CEO and Founder at Dealflo

London has been a world-leading financial centre since the 19th century, but low growth forecasts and the lack of clarity around Brexit are unsettling for businesses. The Chancellor has had to work hard to ensure that the UK remains an attractive place to invest and innovate post-Brexit. The new National Investment Fund means that even after Brexit, the UK will remain a hub for FinTech innovation and will attract fast-growing tech companies.

Niels Turfboer, Managing Director of UK & Benelux, Spotcap:

The FinTech industry is going from strength to strength and the UK Government can play an important part in enabling FinTechs to continue to thrive.

We therefore welcome Philip Hammond’s promise to invest over £500m in numerous technology initiatives, including artificial intelligence and regulatory innovation, as well as unlock over £20bn of new investment in UK scale-up businesses.

With this assurance, the government has shown a strong commitment to the FinTech sector, which will hopefully help tech companies all around the UK to flourish and grow.

World Economic Forum member Jane Zavalishina, CEO of Yandex Data Factory

The reality is that it is not the scientific development of AI that will be game-changing in the next few years, but instead the more prosaic, practical application of AI across many different sectors.

While AI is too often associated with self-driving cars and robots, the truth is the most significant AI applications that are of most significance to businesses, are actually the least visually exciting. AI that improves decision-making, optimises existing processes and delivers more accurate demand prediction will boost productivity far more powerfully than in all sectors.

But it’s not just productivity that will be significantly impacted – business revenue will also benefit. The beauty of AI lies in its ability to be applied with no capital investments – making it an affordable innovation for businesses to adopt. Unlike what is commonly thought, applying AI does not require infrastructure changes – in many processes cases we already have automated process control, so adding AI on top would require no investment at all. Instead, companies will see ROI within just a few months.

Martin Port, Founder and CEO BigChange:

We welcome this announcement and support for tech businesses from the Chancellor. Financial backing and stability is a huge hurdle facing all start-ups, so I am pleased to see the government pledge more than £20 billion of new investment. I just hope this funding is easy to access and readily available for those who need it, rather than being hidden among reams of red tape.

Leon Deakin, Partner in the technology team at Coffin Mew:

As a firm with a growing technology sector and client base in this area we are obviously delighted to see specific investment in the technology sector, particularly in AI and driverless vehicles.

Doom mongers have long been predicting that the UK and its tech hubs will be hit hard by Brexit and there have been numerous reports of rival cities within the EU which have sought to position themselves as alternative options. However, we are yet to see this materialise and incentives and commitments such as those announced by the Chancellor in these innovative but essential areas have to be great news for the economy, the sector and those who advise businesses in it.

Of course, creating the next unicorn is no easy task but a serious level of investment of the magnitude announced should at least ensure those businesses with promise have the best chance to scale up even if they don’t reach the $1billion level. Likewise, there is little point developing these new technologies if the infrastructure and support is then not there to utilise them properly

Matthew Adam, Chief Executive Officer of We Are Digital:

With the UK economy now expected to grow by 1.5% in 2017, a downgrade from the 2% forecast made in March, coupled with the challenges of Brexit, the need for the UK to sit at the forefront of digital skills and inclusion is more pressing than ever. We need to be able to grasp, with both hands, the digital opportunities that present themselves to us in order to make us a true global digital force.

The reality is that we simply cannot afford not to. Independent analysis shows that getting the UK online and understanding how to use digital tools could add between £63 billion - £92 billion to UK Plc’s annual GDP. Indeed, it is my belief that economies which focus strongly on getting its citizens online are also more productive.

The Chancellor has said that a new high-tech business is founded in the UK every hour, which he wants to increase to every half hour. It is imperative we support this growth through the announced £500m investment in artificial intelligence, to 5G and full-fibre broadband. However, to bridge the need for the 1.2 million new technical and digitally skilled people which are required by 2022, we must create and support retraining opportunities across society to make the UK truly digital.

Technology improvements are causing widespread changes in every market and the public sector should be no exception, especially as it often faces the biggest social problems to solve. I’m glad the government is waking up to the fact that the latest technological advances don’t need to be assigned only to the private sector, but can do a lot of good to the community at large. We know from our direct work with the Home Office that every government and council department is moving its processes online. Whether it’s chatbots to automate processes, or solving how people engage with Universal Credit, there is so much we can do here with ‘Gov -tech’

I therefore welcome the Chancellor’s digital announcements today and consider this budget as not so much a leap in the right digital direction, but more a necessary conservative step.

 

UK Growth, Forex & Investment

 

Owain Walters, CEO of Frontierpay:

The Chancellor’s efforts to win younger voters from Labour by abolishing stamp relief for first-time buyers on homes up to £300,000, and on the first £300,000 of properties up to £500,000, come as no surprise. The potential for such an announcement has been a hot media topic in recent weeks and as such, we don’t expect to see any significant impact on the value of the pound.

“In the wake of this Budget, any real movement from the pound will be caused either by developments in the Brexit negotiations or the potential for a further interest rate rise. I would therefore advise any businesses that want to stay on top of turbulence in the currency markets to keep a close eye on inflation data.

Markus Kuger, Senior Economist, Dun & Bradstreet

It’s not surprising that the Chancellor opened this year’s statement with a focus on Brexit; even as businesses absorb the implications of the Budget, they have a close eye to the ongoing negotiations and any likely trade agreement, which is likely to profoundly impact their future. The government’s move to provide a £3bn fund in the event of a no-deal outcome is designed to increase business confidence. In the meantime the business environment remains challenging, and Dun & Bradstreet forecasts that real GDP growth in 2018 will slow to 1.3% (from 1.8% in 2016). Businesses should continue to follow the Brexit negotiations closely and consider that operating conditions could change dramatically over the next 18 months as the Brexit settlement is clarified.”

 Damian Kimmelman, CEO of Duedil

We welcome the government’s announcement that the Enterprise Investment Schemes’ (EIS) investment limit, for knowledge intensive scale-ups has been doubled.

The EIS has been great for attracting investment for small businesses, however we need to ensure investment through the scheme is not being used for capital preservation purposes, but instead to encourage the growth of companies.

The key to increasing investment in ‘higher risk’ growth companies through the EIS scheme, is to eliminate information friction. With more data, investors can price risk effectively, so they can lend to support the small businesses forming the backbone of the economy, driving growth, and creating jobs.

Lee Wild, Head of Equity Strategy at Interactive Investor:

This budget was always going to be especially tricky for the chancellor. Hitting fiscal targets amid wide divisions over Brexit, while also spending more on populist policies to distract voters from Conservative party infighting and dysfunctional cabinet, was a big ask.  Hammond wasn’t fibbing when he promised a balanced budget. Once tax giveaways, downgrades to growth forecasts, billions more for the NHS and the rest are put through the mincer, both the FTSE 100 and sterling are unchanged.

Given Britain’s housing crisis was an obvious target for the chancellor, he really needed something substantial to make his aim of 300,000 new homes built every year anything more than a pipe dream.  Committing to at least £44 billion of capital funding, loans and guarantees to support the housing market will go a long way to achieving the chancellor’s ambitious target. Abolishing stamp duty for first-time buyer purchases up to £300,000 is a tiny saving, however, and buyers, especially in London, will still require a huge deposit to get a foot on the housing ladder.

The market hung on Hammond’s every word, causing a comical yo-yo effect as the chancellor slowly revealed his strategy.  A threat to use compulsory purchase powers where builders are believed to be holding land for commercial reasons, could cause sleepless nights.

Overall, Hammond’s ideas are sound, but probably not enough of a catalyst to get sector share prices rising significantly near-term, given mixed results in the run-up to this budget.

Mihir Kapadia – CEO and Founder of Sun Global Investments:

The Autumn budget statement from Chancellor Phillip Hammond was as expected, with a few pleasant surprises. While Mr Hammond set out his policy proposals with a "vision for post-Brexit Britain", he also acknowledged that his Budget was "about much more than Brexit".  With the Conservatives struggling in the polls, the Chancellor was under pressure to regain support for his party, which is currently in a fragile coalition.

The expected announcements include the decision to abolish stamp duty for first time buyers on properties up to £300,000, addressing the housing crisis, an immediate injection of £3.75 billion into the NHS, investments into infrastructure (transport and network), freezing duty on fuel, alcohol and air travel, and finally a Brexit contingency budget of £3 billion.

While today’s budget was populist and aimed at the electorate, it has to be noted that the Office for Budget Responsibility (OBR) sharply downgraded both Britain's productivity and growth forecasts, as well as its business investment forecasts, meaning the UK's finances look set to worsen over the coming years. This does not factor the possibility of a Brexit-related downturn or a wider global recession, which has already been seen as overdue by many forecasters.

We expect the abolition of stamp duty for first time buyers on properties up to £300,000 will draw extra attention and headlines from much of today’s announcements. It is vital that we acknowledge the warnings from the Office for Budget Responsibility.

 

Angus Dent, CEO, ArchOver:

The UK’s productivity growth continues to decrease and we’re looking in the wrong place for answers. It’s not just a case of everyone working a bit harder. Investment in public infrastructure and fiscal policy will be the defining factors that help the UK catch up, while real growth will come from our SME sector.

Britain is known as a nation of entrepreneurs. Yet we’re in real danger of not giving our SMEs the support they need to thrive. We need a bottom-up approach where small businesses with bright ideas have access to the finance and advice they need to grow. Only then will we have the firm economic foundation we need to build our productivity post-Brexit.

The expansion of the National Investment Fund in today’s Budget is a good start, but too many SMEs still have to pay their way with personal savings or put their houses on the line as security if they turn to the big banks for help.

We need to inspire a new culture. We know there is an army of willing investors out there who want to support British business - lending across P2P platforms is on course to rise by 20 per cent by the end of this year according to data from 4thWay.

However, we need to raise awareness among SMEs of the different options available to help them finance their growth. SMEs need to take control of their own destiny. With the right finance in place, they can drive the whole country forward to new heights of productivity. We can’t just leave it to government – small businesses must be given the power and the cash to fulfil their potential.

 

Tax

 

Paul Falvey, tax partner at BDO:

It’s clear that the headline grabbing news revolved around the Chancellor’s decision to abolish stamp duty for first time buyers on properties purchased up to 300,000, at a cost of £600m a year to the tax man. Whilst this is important for people getting on the property ladder, there were other key assertions.

Firstly, HMRC will start to charge more tax on royalties relating to UK sales when those royalties are paid to a low tax jurisdiction.  Although this is only set to raise approximately £200m a year, it sets a precedent that tax avoidance will continue to be on the governments agenda. Implementing the OECD policies is a tactic we expected.

Furthermore, companies will pay additional tax on the increase in value of their capital assets from January 2018. The expected abolition of indexation allowance will mean that, despite falling tax rates, companies will be taxed on higher profits. By 2022/2023 this is expected to raise over £525m.

62% of the businesses we polled before the Budget said they will be willing to pay more taxes in return for a simpler system. Yet, once again, the government has done nothing to tackle the issue of tax complexity. It is a huge obstacle to growth and businesses will be disappointed that there was no commitment to setting out a coherent tax strategy.

Craig Harman is a Tax Specialist at Perrys Chartered Accountants:

Although it was widely anticipated beforehand, the only real rabbit out of the hat moment for the Chancellor was confirming the abolishment of stamp duty for first time buyers. This equates to quite a generous tax incentive for those able to benefit resulting in a £5,000 saving on a £300,000 property purchase.

The Chancellor has also stood by his previous promises, by raising the personal allowance to £11,850, and the higher rate threshold to £43,650. This is in line with the commitment to raise them to £12,500 and £50,000 respectively by the end of parliament.

Small business owners will be pleased to note that speculation regarding a decrease in the VAT registration threshold did not come to fruition. It was anticipated the Chancellor would look to bring the UK in line with other EU countries, however this will be consulted on instead and may result in changes over the next couple of years. Any decrease in the threshold could place a significant tax and compliance burden on the smallest businesses.

Ed Molyneux, CEO and co-founder of FreeAgent

I don’t believe that this is a particularly positive Budget for the micro-business sector. Rather than actually offering real support or meaningful legislation to people running their own businesses in Britain, the Chancellor has simply kept the status quo.

While it’s pleasing to see that the VAT threshold has not been lowered - which would have added a significant new administrative burden to millions of UK business owners - this is hardly cause for celebration. Neither is the exemption of ‘white van men’ from diesel charges, which is the very least that the Government could have done to protect the country’s army of self-employed tradespeople.

It’s also disappointing that there are still a number of issues including digital tax that have not been expanded in this Budget. I would have preferred to see the Chancellor provide clarity on those issues, as well as introducing new legislation to curb the culture of late payment that is plaguing the micro-business sector and further simplifying National Insurance, VAT and other business taxes.

Rob Marchant, Partner, Crowe Clark Whitehill

The Chancellor announced that the VAT registration threshold will not be changed for the next two years while a review is carried out of the implications of changing this (either up or down).

Having a high threshold is often regarded as creating a ‘cliff edge’ for businesses that grow to the point of crossing that line. However, keeping a significant number of small businesses away from the obligations of being VAT registered allows them to focus on running their operations without additional worry. Many small businesses will welcome the retention of the threshold.

The consultation should look at ways to help smooth the effect of the “cliff edge”, while continuing to reduce administrative obligations for small businesses.

Jane Mackay, Head of Tax, Crowe Clark Whitehill

The tax avoidance debate has centred around large multinationals and their corporate tax bills. High profile cases have eroded public trust in how we tax companies. By maintaining the UK’s low corporate tax rate, currently 19%, and reducing it to 17% from 2020, the Chancellor accepts that corporate tax is only of limited relevance in our UK economy. It accounted for around just 7% of UK tax revenues last year.

The Budget announces changes to extend the scope of UK withholding taxes to tax royalty payments in connection with UK sales, even if there is no UK taxable presence. There will be computational and reporting challenges, but this measure may pacify those who feel the UK is not getting enough tax from international digital corporates which generate substantial sales revenues from the UK

 

Healthcare & Retail

 

Hitesh Dodhi,Superintendent Pharmacist at PharmacyOutlet.co.uk

With a focus on Brexit, housing and investment into digital infrastructure, it was disappointing to see a many healthcare issues overlooked in today’s Budget. The additional £2.8 billion of funding for the NHS in 2018-19 is a undoubtedly a step in the right direction, but it falls short of the extra £4 billion NHS chief executive Simon Stevens says the organisation requires.

What’s more, the Budget lacked substance and specifics; it did little to progress digitalisation in the healthcare sector – an absolute must – while the opportunity to promote pharmacy to play a greater role in delivering front-line services to alleviate the burden on GPs and hospitals was also overlooked. These are both items that should feature prominently on the Government’s health agenda, but the Chancellor did little to address either in today’s announcement.

Jeremy Cooper, Head of Retail Crowe Clark Whitehill:

There is little in this Budget to bring cheer to the struggling retail sector.

The changes to bring future increases in business rates into line with the Consumer Price Index in 2018, two years earlier than previously proposed, is welcome, but is it enough for hard-stretched shop owners?

The National Living Wage will increase for workers of all ages, including apprentices, which is excellent news for lower paid employees. Retailers would not begrudge them this increase, but retail tends to have a higher proportion of lower paid employees and the impact on store profitability and hurdle rates for new stores should not be underestimated.

There is more positive news for DIY, home furnishings and related retailers in the form of the abolition of Stamp Duty Land Tax (SDLT) for first time house buyers. This should help stimulate the first time buyer market and free up the wider housing market which in turn should boost retail sales for DIY and home furnishings retailers from buyers decorating and furnishing their new homes.

 

Property & Real Estate

 

Paresh Raja, CEO of bridging specialist MFS

After an underwhelming Spring Budget that completely overlooked the property market, this time around the Chancellor has at least announced some reforms that will benefit homebuyers. While stamp duty has been cut for first-time homebuyers, the amount of money this will save prospective buyers is in reality still limited – the average first-time buyer spends £200,000 on a property; abolishing stamp duty for them will save them just £1,500.

Importantly, homeowners looking to upgrade to another property still face the heavy financial burden of stamp duty, which will ultimately deter them from moving house. I fear this will have significant implications in the longer term, decreasing the number of people moving from their first property purchase, and thereby reducing the number of properties available for first-time homebuyers, and reducing movement in the market as a whole.

Fareed Nabir, CEO and founder of LetBritain

“Having acknowledged the growing number of Brits stuck in rental accommodation, it’s pleasing to see the Government deliver a Budget heavily geared towards the lettings market. With 7.2 million households likely to be in the rental market by 2025, the Chancellor has seized the opportunity to continue with the recent wave of reforms by offering tax incentives for landlords guaranteeing tenancies of at least 12 months. This should hopefully have a trickle-down effect on rental prices, offering more financial manoeuvrability for tenants saving to buy their own house – something the Chancellor has made easier – while also providing additional security for renters.”

Richard Godmon, tax partner at Menzies LLP

We should to see house price increases almost immediately on the back of this announcement. His commitment to building an extra 300,000 homes a year is not going to happen until 2020s, so this measure could lead to market overheating in the meantime.

The removal of indexation allowance will come as a further blow to buy-to-let landlords, many of whom have been transferring their portfolios into companies since interest the restriction rules were introduced. This will mean paying more tax on the future sale of properties.

Now that all sales of UK investment property by non-residents after April 2019 will be subject to UK tax, it effectively means one of the incentives to invest in UK property by non-residents has been removed.

Jason Harris-Cohen, founder of Open Property Group 

There was a lot of speculation before the Budget that the Chancellor would reduce or temporarily suspend stamp duty for first-time buyers, in a bid to help young people get on the property ladder. What we got was the complete abolishment of the tax on first-time house purchases of up to £300,000, effective from today, and in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by first-time buyers will be exempt from stamp duty. This is arguably the biggest talking point of today’s announcement and as the Chancellor says will go a long was to "reviving the dream of home ownership".

It was equally refreshing to hear that the Government is committed to increasing the housing supply by boosting construction skills and they envisage building 300,000 net additional homes a year on average by the mid-2020s. However, I was surprised that local authorities will be able to charge 100% premium on council tax on empty properties, though I appreciate that this is a further stimulus to free up properties sitting empty and bring them back to the open market to increase supply. Conversely this could result in falling house prices if there is further supply and lower demand following a period of political and economic uncertainty.

What was disappointing, however, was the absence of any mention to reverse the stamp duty change that were introduced in 2016 for buy-to-let and second homes, which is currently deterring people from investing in the private rented sector. The longer it is around the more of a knock on effect it will have on the growing homelessness crisis, a problem the Government plans to eliminate by 2027 - a bold statement from Mr Hammond!

 

We’d love to hear more of Your Thoughts on Phillip Hammond’s Autumn Budget.  Will it benefit Britain and will the reduced growth forecasts have an impact?  Let us know by commenting below.

Statistics released by the Republic of Estonia show that the number of e-Residency applications now exceeds the yearly number of births in the country. According to official data, the total number of 2017 births to November was 10,269, compared with 11,096 e-Residency applications for the same period.

“With over 27,000 e-Residency applications to date, we’ve seen the initiative’s popularity grow steadily since launch.” said Kaspar Korjus, Programme Lead, e-Residency. “e-Residency offers the freedom for every world citizen to easily start and run a global EU company from anywhere in the world, and as of October 2017, our e-Residents own over 4,000 enterprises.”

The project has attracted applications from over 150 countries from across the globe. Finland topped the applicant list, with the UK coming in 5th place for the total number of submissions when ranked by country. Of those applying for e-Residency, 41% submitted an application in order to start a location independent international business, 27% were looking to bring business to Estonia, 13% stated they were advocates of the initiative and 8% applied to benefit from the programme’s secure authentication technology.

Kaspar Korjus concluded “Estonia is the first country creating a borderless digital society for global citizens by offering e-Residency. Anyone, regardless of nationality or location, can apply for the transnational, government-issued digital identity and benefit from a platform built on inclusion, legitimacy, and transparency.” Companies founded by e-Residents work in a range of industries. Of these sectors, business and management consultancy, computer programming, non-specialised trade, tech consultancy and business support services proved to be the most popular.

“By launching e-Residency, the Estonian government aimed to make Estonia bigger – to grow our digital economy and market with new customers, to spark innovation and attract new investments. We’re delighted with e-Residency's progress to date; but are even more excited to see how the project will grow in the future.”

About e-Residency

Estonia is the first country in the world creating a borderless digital society for global citizens by offering e-Residency. Everyone can apply for this transnational government-issued digital identity and benefit from the e-Residency platform, which is built on inclusion, legitimacy and transparency. E-Residency allows access to Estonia’s public e-services and a variety of e-services provided by international service providers. This provides the freedom for every world citizen to easily start and run a global EU company fully online from anywhere in the world.

E-residents can: open a company within a day and run the company remotely, apply for a business banking account and credit card, conduct e-banking, use international payment service providers, declare taxes, and sign documents digitally. E-Residency does not provide citizenship, tax residency, physical residency or the right to travel to Estonia or EU. The programme was launched in beta mode in December 2014 so that improvements could be made based on the experience of real e-residents already benefiting from the programme. At first, four visits to Estonia were required in order to become an e-resident, establish a company and open a bank account.

In recognition of the potential of e-Residency to help unleash the world’s entrepreneurial potential, the programme has also partnered with the United Nations Conference on Trade and Development to launch eTrade For All, which uses e-Residency to empower entrepreneurs across the developing world and help them access e-commerce.

(Source: the Republic of Estonia)

With news that the performance of ICOs has been ‘nothing short of outstanding’, hitting average returns of 1,320%, here Laurent Leloup, Founder and CEO of Chaineum, discusses with Finance Monthly the prospects of ICOs in 2018, and the staggering capacity they have to make an investment golden.

First introduced in 2014, Initial Coin Offerings (ICOs) have seen a meteoric rise in 2017; resulting in $2.3 billion being raised to date as blockchain startups turn to cryptocurrency to raise funds. Typically described as a cross between an IPO and online crowdfunding using Cryptocurrency, an ICO requires an investor to contribute a certain amount of an existing token, such as Ether, to receive a share in a new currency at a set conversion rate.

As the popularity of ICOs continues to grow, it’s important that organizations understand the range of benefits, both for companies seeking investment and those looking to invest, the ICO model provides compared to traditional investment avenues.

Benefits of an ICO

For organizations looking for investment, an ICO is considered a much faster and easier fundraising method to undertake as anyone can start one. Additionally, the online nature of an ICO means that marketing and settlement costs are significantly lower than traditional fundraising with settlements finalized through the blockchain. This removes many additional costs that are associated with traditional investment which could incur legal fees amongst other expenses.

An ICO-funded startup also benefits from a network of supporters, similar to online crowdfunded businesses, whereby those supporters hold tokens that increase in value based on usage. Essentially, this means that an ICO-funded business already has a customer base in place and is in a stronger position to see faster growth.

As well as offering benefits for companies looking for investment, ICOs also have significant advantages for those looking to invest. Many investors are attracted to cryptocurrencies for their liquidity. Rather than playing the long game and investing vast amounts of money in a startup which could then see your investment locked up in equity of the company, ICOs offer the opportunity to see gains much quicker and can take profits out of the company invested in more easily.

An additional advantage of an ICO for investors is that it has the potential to remove geographical limitations seen with traditional venture financing which typically tends to be tied to global financial hubs such as New York, Silicon Valley or London. ICOs remove this restriction and opens up opportunities for anyone in any geography. This democratization essentially allows anyone to contribute and profit from an investment.

Furthermore, cryptocurrencies can appreciate much faster in value than standard currencies. For example, Bitcoin was worth just $100 in 2013 and in September 2017 was trading between $4,000-$5,000. As well cryptocurrencies from Blockchain startups Monero and NEM both saw huge increases in value at 2,000% increases. Therefore the potential ROI for investors using cryptocurrency is much higher.

What to look for in an ICO?

From an investment point of view, not all ICOs are created equal. Whilst there are apparent benefits to this new investment model, a number of poorly-managed operations have caused some concern within the industry towards the transparency and legitimacy of some ICOs.

However, previous successful ICOs have demonstrated that ambitious blockchain firms can achieve their objective in raising funds through this innovative new model. So what should investors look for when thinking of investing in an ICO?

Firstly, before considering investing in an ICO, it’s important to look for those that offer due diligence. There is currently no formal process to audit an ICO organization which means a company is able to start selling cryptocurrency tokens before a functioning product even exists. Understandably this has led some critics to comment on the legitimacy of some projects.

Before investing, it’s important to carry out a detailed analysis of the project, its objectives, and resource to gauge the likelihood of the project coming to fruition. In addition, the project should be able to provide regular operational updates on its status to ensure the investor feels confident with its progress.

As well as ensuring the legitimacy of an ICO through their due diligence, investors should look for an ICO with a certain level of transparency so they feel confident in their venture. Due to the nature of Blockchain technology, it can be difficult to identify who is purchasing tokens. This means that the true extent of the transaction is not quite clear. However, some blockchain platforms enable organizations to require and share personal information when making a transaction. Therefore before investing, it’s wise to consider the project’s Know Your Customer (KYC) measurements in place.

ICOs have seen rapid growth within the last year with more projects planned in the near future. However, for those looking to invest or launch their own ICO, it’s essential to understand how to navigate the ecosystem, including risks associated with the mechanism. Despite being a relatively new fundraising model, the rate at which they have grown in popularity means that we will continue to see more and more blockchain startups turn to the cryptocurrency community."

In its new report Tokenisation: Implications for the venture capital industry’, Mangrove Capital Partners highlighted that the performance of ICOs ‘has been nothing short of outstanding’ with blind investment in each ICO, including those that failed, generating an average return of 1,320%. The research also found the majority of large-scale ICOs (i.e. those over $10m) is focused on either the blockchain economy or financial services industry.

The report explains how ICOs could dramatically change capital raising for startups by allowing founders to “raise significant capital (perhaps even all the capital they could ever need) in one early round of fundraising without giving away any equity in the business”. It also explains the benefits for investors, with the disruptive new funding mechanism bringing liquidity, accountability and transparency to investing in private companies.

While the report acknowledges that the performance of ICOs is linked it the rapidly ascending value of ether – which has risen from around $8 at the start of the year to a high of $390 in September – it attributes ether’s rising value to the growth in ICO fundraisings and increasing demand for tokens. Furthermore, it predicts “the value of ether will continue to rise as more businesses opt to issue tokens and the ICO market matures.”

The report also suggests that a growing market for ICOs will lead to a decreasing requirement for venture capital and that ‘the balance of power would likely tip from the investors to the entrepreneurs’, with mid to late stage financing hit hardest. It explains how ICOs could have significant implications for the VC operating model with venture firms losing their various rights, which cover everything from board and governance issues through to economic rights in certain situations. It suggests they may also need to adopt a more active trading strategy more akin to hedge funds as investment in private companies becomes more liquid.

“ICOs do not put VCs out of the game. They are free to take capital and invest in startups of any kind, and, subject to authorisation from their own investors, could just as easily invest through Crypto into ICO as with FIAT into equity or convertible debt,” comments Skype’s former chief operating officer Michael Jackson, partner at Mangrove Capital Partners. “However, the rhythm of a weekly partners meeting and a monthly investment committee won’t work in an active environment responding to real world events.”

Mangrove’s report also suggests that regulated exchanges could be established to protect investors from fraud: “Interestingly, many projects today fit into existing regulatory frameworks and, with small changes to implementation rules, could easily be accommodated without anything other than a better understanding…In the mid term, it would be logical that a parallel structure to existing stock exchanges will be created - likely geographically and then vertically..” continues Michael Jackson, partner at Mangrove Capital Partners.

Background on ICOs:

-       The initial coin offering (ICO) market has since grown at a dizzying pace - with over $3bn raised through issuances of token-based digital currencies since the start of the year.

-       San Francisco’s Protocol Labs Inc., for example, raised $253 million in an ICO to build a network with blockchain technology on which digital storage can be bought and sold using the Filecoin tokens

-       ICOs have of course attracted considerable controversy and for good reason. ICOs currently lack a robust regulatory framework and do not confer any of the ownerships rights and legal protections that regulated shares do.

-       In September China banned ICO funding, stating that it had “seriously disrupted the economic and financial order”

-       UK regulators have warned consumers they are "very high-risk, speculative investments" and that investors “should be prepared to lose their entire stake”.

What is a token?

A token is a digital asset based on blockchain technology that can be transferred between two parties without the need for a central intermediary. Tokens created using the Ethereum blockchain can have a variety of attributes attached and, with “smart contracts” added, they articulate, verify and enforce agreements between parties. The ERC-20 token standard, defines a common list of rules for all Ethereum tokens to follow and has made launching tokens on top of the Ethereum blockchain very straightforward.

What is an Initial Coin Offering?

The use of ERC-20 tokens has led to a new method of raising capital known as an Initial Coin Offering (ICO) in which projects issue tokens to investors in exchange for digital currency such as bitcoin or ether. The tokens allow investors to use the digital services that the startup plans to produce or even sell them if they appreciate in value.

(Source: Mangrove Capital Partners)

Imagine for a moment that you have been successful as both a business owner or builder and as an investor, but come from one of the world’s less well connected or respected nations. Your wealth and success means almost nothing when it comes to the queue at passport control. Despite being able to sponsor a new department, your children will find it difficult to study at the Sorbonne or Cambridge. Christmas shopping on Oxford Street is just that little bit more difficult when all the presents need to be exported. What is a business titan or entrepreneur to do? Increasingly, the answer is to embrace the world of citizenship by investment.

Citizenship by investment is a rapidly growing market, raising money for governments and generating inward investment into nations, by making it possible for the world’s wealthy to pay their way to a speedy naturalisation.

Until only a few years ago, there were a small number of tiny islands, mainly in the Caribbean, that allowed wealthy foreigners to invest their way into a passport. Countries like St Kitts and Nevis and Antigua and Barbuda are well known for this within the financial services wealth management sectors. However, the financial crisis made raising government revenues much more pressing, leading to several EU member states, most notably Cyprus and Malta, to embrace the concept.

The scale of these operations was recently uncovered when it was reported that the Cypriot scheme has raised more than €4 billion euros since 2013. While answering questions to MEPs, the Cypriot Interior Minister admitted that the scheme had raised €2.5 billion euros. Whichever number you prefer to believe, there is clearly money in citizenship.

The Cypriot scheme was launched soon after one in Malta. Both have come in for criticism because of the limited amount of time that an applicant and their family needs to spend in their respective new country. At the time, the European Parliament made objections (which forced some changes) about the Maltese scheme but were ultimately powerless to stop it.

It is a surprisingly innovative market where nations are competing against each other, both on price and service. Perhaps the best example of this came in October this year when it was announced that the tiny Pacific state Vanuatu would now accept payment in Bitcoin.

 

Opponents everywhere

Typically, citizenship programmes raise complaints at home as well as abroad. In the case of Malta, the Nationalist Party, currently in opposition, had vowed to stop the scheme as soon as it came to power. Earlier this year they lost a snap general election and their new party leader seems much less likely to oppose what is known as the Individual Investor Programme.

Opponents often use emotive phrases such as “selling our soul”. A more objective reality might be that smaller nations are selling access to the rest of the world. EU members are really selling access to Schengen Zone nations and rights of residence in those countries. This was one reason for the European Parliament’s objections. They felt, probably correctly, that a substantial proportion of buyers were more interested in having the right to live in Paris, London or Rome than Nicosia or Valletta.

Governments put applicants through a vetting procedure to ensure that they are not accepting some sort of international criminal into their fold. Just how effective these procedures are is open to question though and organisations like the EU are worried that their own border security might be compromised. How likely this is will remain impossible to judge, until or unless something terrible happens and it turns out that the perpetrator had passed through a citizenship by investment scheme.

As the world globalises further, nationality is becoming a practical issue, since every aspect of our lives is underpinned by our legal right to exist in a location. News stories relating to Brexit have highlighted this in recent months. Citizenship applications by Brits in European member states and EU citizens applying for a UK passport have risen substantially – though those numbers have risen from hundreds per year to a few thousand. When the full impact of Brexit is felt, EU government offices will be overwhelmed by the volume of applicants. Their slow and cumbersome procedures are likely to sink under the weight of hundreds of thousands of extra applications each year.

 

What value does a piece of paper really have?

In the defence of governments, passports cannot be very expensive to produce and the rights they enable are already in place for the rest of the population, reducing the marginal costs to support an extra family to virtually nil. Should that family decide to live in Barcelona or Berlin, then the marginal cost is reduced even further. If people are willing to pay millions for that, then it is easy to understand a politician’s enthusiasm.

It is also easy to see why buying a second (or third) passport might be appealing for the purchaser. Some in wealth management view additional citizenship as the ultimate diversification. It provides a level of potential freedom that few in life can attain – no government has complete control over you. It also has the power to dramatically alter the owner’s income tax position, which is an obvious appeal. Many buyers view it as a way to move their family abroad, which might be for many reasons.

Like them or loathe them, it is clear that sovereign governments have the legal right to issue a passport to whomever they wish, suggesting that citizenship by investment is here to stay and business titans and their families will continue to live just that little bit differently from the rest of us.

 

About the author:

Stuart Langridge is originally from the UK and has lived in Malta for 6 years. He has worked as a freelance writer on a wide range of economic and financial topics for many years and now works in marketing for an online gaming company.

 

For our October front cover story, Finance Monthly reached out to Joseph Pacini - the CEO and Co-Founder of XIO Group. He is responsible for the strategy and management of the global multibillion alternative investments and research. Headquartered in London, XIO Group also has operations in China, Hong Kong, Germany, Switzerland, United Kingdom and the United States.

XIO Group’s strategy is to identify and invest in market-leading and high-preforming businesses located across Europe and North America, and to help these companies in capitalizing on untapped opportunities in fast-growing markets, especially those in Asia. Here Joseph tells us more about it.

 

What have been the alternative investment trends in Hong Kong and globally in the past twelve months.

What we have seen is that there has been a tremendous amount of competition in the market for high-quality assets. To differentiate ourselves from our competitors, we have sought to uncover untapped opportunities and proprietary deals, in order to generate substantial returns for our investors.

 

What were XIO Group’s beginnings?

I had known Athene Li for many years from Asia and from when I was Head of Alternative Investments at BlackRock. Initially, we were planning to work together under the BlackRock Alternatives team, but after a variety of personal/firm decisions, we decided that it would be a great opportunity to set up our own firm with a specific strategy to invest in market-leading businesses and take them to Asia.

 

What considerations do you look at when identifying a business to invest in?

When we look at businesses, we want to have a market leader that is already dominant in their home market, but may not have achieved that globalization to the degree that they want. We then assist the company and help them grow. We can help them grow in many regions, whether that’s in North America, Europe or Asia. However, our particular expertise is in growth into China.

 

What challenges would you say you and XIO encounter on a regular basis? How are these resolved?

The challenges that we and XIO face on a regular basis are connected to the intense competition on the market. There’s also a misconception that we focus solely on Chinese companies, which couldn’t be farther from the truth. In fact, we do not invest in China at all; our growth opportunities are bringing companies from the West into global high-growth markets – and specifically China.

 

How does your experience in alternative investments inform your decision-making strategy at XIO Group?

Having worked at large firms previously, such as Bain Capital, JP Morgan and Blackrock, I understood how large institutional players assess and go after certain markets for alternative investments, so this has given me a great foundation. However, I think running your own firm is very different, as you are an entrepreneur as well and it forces you to be “scrappy”. Effectively, you fight harder when it is your own firm because you own your destiny – whether it be success or failure.

 

As CEO, how do you ensure you are directing the company in the correct direction? How do you advise your team to make the correct decisions for the company?

I would simply state that as CEO, my job is to set broad goals and principals, and then allow my team to work within our framework to achieve those objectives. For example, looking at where we want to diversify our business, how we want to grow our platform, the types of businesses we look for and how we build out our portfolio – these are the strategic areas I focus on. For other decisions, we allow that to be done more on a deal team basis. I look to give our colleagues the knowledge and responsibility, as well as opportunity to bring forward their ideas on what a good investment platform would be. With that also comes the accountability.

 

What does a typical day look like for you? What daily challenges do you encounter and how do you overcome them?

I tend to be travelling for 2 weeks of the month but my days are similar. I start with calls to Asia for the first few hours, then I deal with meetings in the UK and in the afternoon, and then I deal with calls back to the USA. My time is divided between approximately a third spent on client type of items, a third on existing portfolios and a third on new and potential investment opportunities.

The main challenge as a CEO is how to prioritise. You have to take in a lot of information and really prioritise what’s the most important thing that only you can deal with at that time and then delegate the remaining tasks to others.

 

What are your strategic goals and vision for XIO’s future?

Our goal is to continue to grow out our platform, at first in private equity. Our long-term objectives are related to eventually diversifying into other alternative assets classes, similarly to how I have done it at other firms and overtime, really build a diversified alternative investments platform.

About XIO

XIO Group is a global multi-billion dollar alternative investments firm headquartered in London, United Kingdom. XIO Group’s strategy is to identify and invest in market-leading and high-performing businesses located across Europe and North America and to partner with management to help these companies in capitalizing on untapped opportunities in fast growing markets, particularly those in Asia. XIO Group has operations in the United Kingdom, Germany, Switzerland, Israel, Hong Kong, Mainland China and the United States of America.

 

About Joseph Pacini

Joseph Pacini is the Chief Executive Officer and Co-Founder of XIO Group. Prior to XIO Group, Joseph was Managing Director and Head of BlackRock Alternative Investors (BAI) for Asia Pacific. Based in Hong Kong, Mr. Pacini was responsible for developing client-focused alternative investment strategies as well as the continued growth of BlackRock’s USD $24 billion alternatives platform and product offering in Asia.

Prior to joining BlackRock in 2012, Joseph was the Head of JP Morgan Alternative Investments Group in Asia. In that capacity, Mr. Pacini’s responsibilities included the business development, origination, due diligence and structuring of hedge fund, private equity, real estate and direct deal opportunities for its USD$10 billion platform.

Before moving to Asia, Mr. Pacini was a member of the JP Morgan Private Bank Alternative Investments Due Diligence Team based in New York. Prior to joining JP Morgan in 2003, Joseph was an Analyst at the private equity firm Bain Capital, LLC. in London, England.

Joseph received a Bachelor of Science in International Business from Brigham Young University where he graduated with University Honours.

Website: http://www.xiogroup.com

Graham Parker is the CEO and Co-Founder of Gravity Supply Chain Solutions Ltd. Headquartered in Hong Kong, Gravity is a cloud-based SaaS "real-time" b2b, Supply Chain Visibility & Execution Platform. This month Finance Monthly speaks to Graham about the company’s beginnings, growth period and vision for the next few years.

 

How did the idea about Gravity come about?

Gravity came about borne out of frustration and an obvious gap in the market. Logistics and Supply Chain Physical processes had and continue to evolve extensively; however, there was no one system giving a real-time view. The bigger the supply chain, the more bolt-on systems were required and ultimately - spreadsheet reporting. Many proclaim to do this and do that, but the reality was they simply didn't, and certainly not across the entire critical path. Darren Palfrey (Co-Founder and COO) and I decided to address the problem and this is how we started Gravity.

 

What have you managed to achieve with the company so far?

Gravity is now moving from a beta to full execution status with a number of successful POC's and fully deployed clients on board. We now have/are moving towards having contracts with some very large logistics providers, FMCG & CPG clients and Manufacturing companies, some of which are significant within their industry. We have an aggressive but achievable growth period, sustainable by the work we have put into building out a robust and scalable backend over the past three years. In essence, we are good to go, "concept to commerce" and the adoption rate is growing.

 

What are the key challenges that you’ve been faced with in the past 12 months? 

Managing people’s expectations and keeping true to our core values. For example, when you initially start, everyone wants a little something extra. The danger is that you try to please everybody, all of the time. The challenge is not that you won't build these elements, it's just keeping the development teams focused and build to scope. Being able to say ‘no, not at this point’, however this is or will be planned into the next phase of development. From start-up, through scaling into Beta and execution, you have to remain focused. We also have a very loyal and keen investor base, who have been very patient and supportive, however, we are mindful that the business needs to move forward in line with our forecasts and projections. To date, we have raised circa US$8.5m and have hit/excelled every milestone along the way, including our MRR projections.

 

What is your vision for Gravity? Where do you see the firm in 3 years? 

We intend to dominate the supply chain visibility space. We are a supply chain tech company providing "real-time" solutions for the supply chain industry built by supply chain users and industry experts. Gravity will push the boundaries and expectations for supply chain executives, the overall opportunity is endless and we will certainly evolve into for more than just the SCM visibility sector. We have a strong vision, growth plan and roadmap, plus a lot of future ideas will come from our clients as they evolve and use the platform.

 

Tell us a bit about your role within the company – what are your main responsibilities? 

I'm focusing primarily on growth, customer adoption and business partnerships/collaboration. I also lead the BOD's and represent the interests of our investor base. We are a lean but fast growing team, and individually we all kind of jump in and help out where required. What we are good at is airing ideas, opinions and suggestions relating to product or approach. Key to this is the people, so making sure there is a good balance and allowing them to be creative, at the end of the day it's all about execution, experience and usability so I ensure we remain focused on the team and the business.

 

For more information, please email:  hello@gravitysupplychain.com

Welcome to Finance Monthly's countdown of the Top 10 Greatest Trades that the trading floor has ever seen.  We take a look at each trader, the audacious move they pulled off and where they are now.

Scroll through to see who tops our list.

Top 10 Greatest Trades Ever - Jesse Livermore

10. The 1929 Short - Jesse Livermore 

Result: $100 million profit

Livermore can be classed as one of the world’s pioneers in terms of shorting the market.

His first attempt was shorting the market by selling Union Pacific just before the San Francisco Earthquake of 1906. The pay-out was £250,000 but that was only the beginning. He followed that up by shorting the market again in 1907. As the stock market crashed Livermore took home $1 million for his efforts. Always looking for the next target, he concentrated on the wheat industry in 1925, with another successful short that earned him $3million.

Livermore was gaining a significant reputation but his real coup de grace would make his earlier trades pale in comparison. In the early autumn of 1929 the Dow Jones is up five-fold in the last 5 years and the euphoric atmosphere that pervaded the entire floor wasn’t shared by Livermore. As the money flowed in reaching an $8.5 billion high, it got to the point where the outstanding loans had exceeded the current amount of money in circulation. In September, as the stocks began to level out, Livermore gambled on his biggest short, which took place on that fateful day in 1929. Looking for a bigger haul and seeing what was coming, Livermore shorted the entire market. As the US Financial sector went into meltdown, Livermore earned himself $100million which in today’s market would equate to a $1.4 billion-dollar haul.

Incredibly, Livermore was declared bankrupt and was banned from the Chicago Board of Trade in 1934, just five years after his greatest success as an investor. No one knows exactly why and indeed how he lost all his money, but his reputation as one of the best ‘shorters’ still stands to this day.

Next: Shorting Black Monday

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Now that CMOs have a seat at the revenue table, there is also pressure to prove ROI. Since the only true measure of ROI is sales, it’s imperative that the marketing and sales leaders are aligned around key objectives and goals to truly prove their contributions to the bottom line. Here Rishi Dave, CMO at Dun & Bradstreet, talks Finance Monthly through the matter.

While sales and marketing teams have made great strides in recent years to better align their outreach to customers, there is still a huge disconnect between the teams and, more importantly, between sales and marketing and the customer. Our recent study showed that, despite increases in new technologies and a proliferation of data and insights, 57% of marketers still find their biggest challenge to be identifying their target customer and the average sales person spends over two hours researching a prospect before making contact. Why are those numbers not improving in lock step with the growth of sales and marketing enablement technologies?

One reason could be the lack of alignment between the sales and marketing departments. And I don’t just mean the age-old disagreement of what’s a good lead and what is considered an opportunity. While those things are important, businesses in this digital world really have to consider aligning around the most foundational element the companies have – and that’s data.

Especially in an environment like Fintech, where we’re dealing with a vast, untapped or underserved community of small businesses, it’s crucial that marketing and sales are aligned on the definition of the B2B prospect – who are our best customers, and where will we find more of them. It’s not just a lead list of businesses and locations: it’s crucial to understand the key factors that will drive a positive sales and marketing engagement, and increase the chance of sales conversion. Factors such as:

In the best of circumstances, using analytics, existing customer profiles based on known behaviour, and unknown behaviour from alternative data sources, all brought together to the business entity level, can be used to create advanced marketing models that will target best prospects with precision.

Businesses can also ensure alignment by implementing a master data strategy across the organisation. This may sound daunting, but all it really means is making sure the data you have is structured, cleansed and connected across the company so that insights can be surfaced to the right people at the right time in order to make better business decisions. And, you can start easily by cleaning one app, like CRM, and growing from there.

With a connected view of all customers and prospects, sales and marketing teams are able to make better holistic decisions about each account- decisions which can lead to revenue growth – the ultimate proof of ROI.

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