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18 technology


tech super stars? The financial services sector has always been at the core of the City of London, but creeping into the foundations of this sector are groundbreaking “fintech“ (financial technology) startups, writes Sahar Bickford-Smith, of counsel, Pitmans LLP


These startups aim to use technology to undercut the established groundskeepers (banks). They have been able to do so largely by taking advantage of decreased consumer confidence in banks after the 2008 financial crisis. They have so far been able to innovate and create new business models that are inducing confidence and excitement.


The fintech startups have brought about something of a revolution in the market with the ease and transparency of the services and products they offer. UK Fintech start-ups such as Transferwise and Azimo have used the mobility of technology in smartphones to make the transfer of money quicker, cheaper and most importantly more convenient. Other companies include Nutmeg, the online investment management company that has challenged the traditional private wealth management model where managers had high minimum thresholds and opaque free structures. Nutmeg allows its customers to manage their investments through data visualisation and analytics, offering special packages with specific goals all accessible from the comfort of the home.


Nevertheless, for all the promises of convenience that have been made, there are still a fairly small number of fintechs. The main reason for this is the regulatory obstacle course that fintechs need to pass through. The payments industry is one of the most highly regulated of industries. While it may be easy to blame stringent UK financial regulations, these are still quite flexible and open to new approaches as compared with the US financial regulations, which are notably inflexible.


Looking at the regulatory picture in a little more detail, the UK regulates certain activities such as investment, payment and lending, requiring the start-ups from the outset to seek regulatory approval to function and conduct business in the UK. Seeking authority from the FCA,


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the regulatory authority, is a very detailed and painstaking process, which from the pre-submission preparation to the post-submission execution period takes a minimum of seven months, which for a startup can be painfully long and expensive.


In August of this year the Government finally moved to acknowledge and facilitate the growth of this sector. The chancellor of the exchequer announced that the UK plans to consider the regulation of virtual currencies and highlighted measures intended to encourage use of alternative finance providers. This, when compared to the approach across the pond, is a fairly monumental move.


The big fintech players have now caused the City’s financial establishment to sit up and take note. The large banks such as Barclays and Santander have sponsored accelerators dedicated solely to fintech in acknowledgement of the importance of these startups. Co- working spaces such as level 39, strategically in the heart of Canary Wharf, have also dedicated their resourses to fintech.


I consider that there is an abundance of opportunity in this sector for innovative businesses, despite the fact that regulatory compliance will absorb significant time and resources at the onset. In the long run ensuring proper compliance with such regulations needs to be viewed as a central feature and selling point of the best fintech businesses, as it may well be key to whether they are seen as investable.


Details: Sahar Bickford-Smith 020-7634-4591 sbickford-smith@pitmans.com www.pitmans.com


Fintech: UK’s next


deals


Southampton Airport sold to consortium


Heathrow Airport Holdings (Heathrow) has agreed to sell its 100% interest in Southampton International Airport, Aberdeen International Airport and Glasgow Airport and to a consortium formed by Ferrovial and Macquarie for £1,048 million in cash and assumed debt, payable in full at closing.


At closing, the sale consideration will be increased to compensate Heathrow for the time delay between the time of agreement and the closing date. In addition, the sale is subject to EU merger regulation clearance.


John Holland-Kaye, chief executive of Heathrow, said: “Southampton, Aberdeen and Glasgow airports and their people have been part of our company for a long time. They are great airports and we are proud of their achievements. We wish the new owners and our airport colleagues every success and are confident the airports will continue to flourish.


“This sale enables us to focus on improving Heathrow for passengers and winning support for its expansion. Heathrow is the UK’s only hub airport, connecting the whole of the UK to the rest of the world.“


Dave Lees, managing director of Southampton Airport, added: “Southampton Airport has undergone a number of ownership changes during its 100-plus year history. During this time it has continued to go from strength to strength, becoming a leading regional airport in the UK and Europe. It is widely recognised for its important role in the regional economy and for its award-winning customer service.


“I am convinced that under new ownership it has a positive future and we will be working together to ensure a smooth transition over the coming months.“


Hampshire Chamber chief executive Stewart Dunn said: “Southampton Airport plays a crucial role in helping to drive our regional economy, and the competitive interest shown in this sale is a good sign of confidence in the region as a whole.


“This is also a significant landmark in the further development of the airport, and good news for the many businesses in Hampshire who rely on it to help them connect to markets.“


The sale is expected to close no later than January 2015.


Chineham Park sold in £430m deal


Chineham Park at Basingstoke has been sold to new owners as part of a £430 million deal which promises to bring new investment and development to the 95-acre business park.


It was bought in a joint venture between Oaktree Capital Management and Patrizia ag, which already own Winnersh Triangle, Reading and Watchmoor Park, Camberley.


Rupert Batho, managing director of Chineham Park, said: “Chineham Park is one of the region’s success stories, with a strong track record for attracting and retaining businesses.


“The purchase by Oaktree and Patrizia is an exciting step in the next phase of the Park’s evolution and, with the existing


management team transferring to the new ownership, we have the best team in place to build on the Park’s pedigree.“


Batho says Patrizia’s customer- focused approach and strong cultural fit will build on the Park’s existing reputation for innovation and service, such as this summer’s introduction of a new ’click & collect’ grocery service in conjunction with Tesco, one of the first of its kind on a UK business park.


The deal, which was supported by Barclays with a £345m loan, also saw the acquisition by Oaktree Capital Management and Patrizia ag of two further business parks in Glasgow and Warrington, making the joint venture one of the largest owners of business parks in the UK.


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – NOVEMBER 2014


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