🦄 The UK Has a New Unicorn

Despite an early rise, London markets turned sour in the afternoon after stocks on Wall Street opened lower, with the FTSE 100 breaking its six day winning streak to close down -0.5%. The oil majors gave up some of yesterday’s OPEC+ announcement-related gains as investors likely took profits off the table, with BP (-1.0%) and Shell (-1.9%) both slipping.

The Pound was a notable gainer on the day, breaking above $1.25 to its highest level in 10 months as the BoE hinted at further rate hikes.

Top Stories

🦄  UK tech firm doubles valuation to become latest unicorn

Quantexa, the high-growth startup using AI to help financial firms manage risk, announced a $129m Series E fundraise on Monday that valued the company at $1.8bn (more than double the $800m valuation at its Series D fundraise in 2021). The company’s data analytics products are predominantly used in risk and compliance for areas such as fraud and money laundering, with Quantexa boasting heavyweight banking clients such as HSBC and Standard Chartered among its user base.

The latest fundraise welcomed Singapore sovereign wealth fund GIC onto Quantexa’s cap table, with existing investors including Warburg Pincus and British Patient Capital also tagging along. Besides supporting new technology development, Quantexa are also looking to use the capital to grow inorganically through acquisitions.

🤝  Wealth management consolidation

Two of the UK’s largest wealth managers are set to combine after Rathbones announced a £839m deal to acquire Investec’s UK wealth management arm. The tie-up gives the pair a combined £100bn in assets under management, creating the UK’s “leading” discretionary fund manager according to Rathbones Chairman Clive Bannister. CEO Paul Stockton was relatively open about the defensive nature of the deal, claiming it allowed the combined business to benefit from cost synergies, whilst separately warning there could potentially be job losses on the horizon.

⌛ Pension fund windfall

Defined benefit pension funds are set to scoop a £30bn windfall as life expectancy falls in the UK. Actuaries’ latest estimates show the average life expectancy fell by six months in 2022 as above-average death rates persisted after the pandemic, reducing the estimated amounts payable by the schemes. For context - total liabilities for defined benefit schemes in the UK stood at 1.28tn as at the latest data available from the ONS.

🏛️ BoE Chief Economist laid the groundwork for further rate hikes

Despite remaining somewhat balanced, BoE Chief Economist Huw Pill hinted at a further rate hike in May, claiming the onus remained on ensuring there were enough rate rises to “see the job through” with regards to inflation. However, Pill was cognisant of the recent banking stress and the effect that rate rises could have on the financial system. He claimed the MPC (committee responsible for rate setting) remained “vigilant” to signs of financial tightening and remained on hand to act on any dislocation in the credit markets. The Pound rose in response.

What Else Happened?

Economics / Politics / General

Sales of London offices nosedived 63% in the first quarter of 2023 compared to the same period last year, as higher borrowing costs and a continued rethink of corporate real estate footprint hit demand. (Note - Manhattan is struggling too)

Screening of foreign investment on national security grounds by the Government will become more transparent, following fears that it is deterring deal making in the UK

Deals

PE giant Apollo Management sweetened the deal for John Wood shareholders, upping its offer to £1.66bn for the London-listed engineering business; caveat - it’s their final offer

Children-focussed financial services provider GoHenry was acquired by US investment platform Acorns, with founder Louise Hill hoping the combination will support them in their aim to serve customers “through all life stages”

LandVault - a UK startup aiming to create the ‘WordPress’ of metaverse experiences - raised a $3m extension to its 2021 Series B funding round

Company News / Trading Updates

Shares of over-50s insurer Saga slumped 16.5% on Tuesday despite a jump in revenue, as it reported a sharp drop in profit before tax along with only a minor reduction in its sizeable leverage pile. (Official)

London-based fintech Clearbank reported a 20% jump in deposits over recent weeks, as banking turmoil led to firms clamouring for its Bank of England-backed accounts

🌎 Global Snapshot

L’Oreal swooped on Australian cosmetics company Aesop, acquiring the brand from Natura & Co (owner of The Body Shop) in a deal worth $2.5bn.

US job openings fell to their lowest level in two years, signalling the first sign of an easing labour market in the Fed’s fight against inflation.

Australia’s central bank decided to pause interest rate hikes in order to “assess the state of the economy”, warning that the full impact of recent hikes is yet to be felt.

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