London is increasingly becoming a key European hub for private equity firms and venture capital, according to a report from financial data company Qodeo.
The city’s attractiveness is driven by two trends: a flood of global capital and stronger banks stimulating the UK economy, and a resurgence of Silicon Valley technology firms.
From a macro point of view, London’s attitude to risk and bureaucracy makes it a halfway point between other European markets, Qodeo’s chief executive Simon Glass explained. This has led to the establishment of a lot of UK funds, which have historically generated strong and stable returns.
The UK is also very good at attracting capital from the Arab countries, Asia and Russia – three regions exhibiting enormous amounts of risk. Firms from those regions are building themselves up in the UK to mitigate their own country’s risks and to take advantage of UK’s economic growth, Glass said.
An increasing number of Americans are interested in building their venture capital firm in London, Glass added. “There is a very strong connection between the US and the UK, that has always been the case. But, a lot of Americans who have previously worked in the UK or Europe are building new firms here.”
London has lagged behind the US in terms of venture capital capabilities and spirit, except in the financial technology sector. However, “London [is] becoming a key centre for crowd-funding, bringing significant opportunities for debt financing,” the report disclosed.
Secondaries firms interested in setting up shop in London include Parisian private equity firm ACG Group. The firm has completed 24 secondaries transactions representing €180 million since it was founded in 2000. It has considered London as an option for a new office, ACG principal Jérôme Marie told Secondaries Investor last week.
In June, Meketa Investment Group opened its first office outside the US, in London and in March, Singapore-based investment firm Temasek opened its first European office in London to support its investments in Europe, the Middle East and Africa.