Vibrant British tech ecosystem attracts foreign investors who want to purchase fast-growing tech companies.
The UK market is in danger of losing what little exposure it still has to high-growth assets as a WAVE of overseas investors target British technology companies.
Following the acquisition of cybersecurity company Avast by NortonLifeLock, Schneider Electric of France’s interest in developing industrial software company Aveva Group, and US buyout group Thoma Bravo’s approach to Darktrace, Canadian Open Text Corp has made a takeover offer for Micro Focus International.
Additionally, GTCR revealed on Tuesday that it is thinking about making a bid for GB Group, a company that specializes in identity verification and fraud protection.
These deals might not be the last given the UK’s attractiveness to bargain seekers and the prolonged selloff in growth assets.
However, the British government’s initiatives to support a vibrant domestic tech ecosystem and draw additional growth listings to London are utterly at odds with the overseas spending frenzy.
Politicians will surely feel uneasy as a result of foreign investors swooping on UK targets, according to Susannah Streeter, senior analyst at Hargreaves Lansdown. It’s new proof that UK assets are viewed as being inexpensive due to the effects of Brexit, the falling value of the pound, the energy issue, and the impending recession that will affect the economy.
Six years after SoftBank Group took the chip designer private, London has been pushing hard for Arm to list domestically. Masayoshi Son, the founder of the Japanese company, has frequently stated that his main goal is to list Arm in the US due to its strong investor base and competitive values. However, he is also thinking about doing so in the UK, in part due to political considerations.
Darktrace, which listed less than 18 months ago, was one of several prominent initial public offerings that took place throughout 2021 in London. Since then, the stock has experienced a wild journey, almost doubling in value before falling back to trade at double the listing price. It’s one of the few tech IPOs from the previous year that hasn’t dropped significantly after going public.
The most recent round of acquisitions will reduce the FTSE All-Share index’s already paltry 1.5% exposure to the technology sector, given all of the prospective buyers are situated outside of the UK. In addition, analysts believe that Keywords Studios, Redcentric, The Sage Group, and Kape Technologies are among the most likely targets for acquisition in the sector.
Even so, the startup scene in the UK is the most vibrant in all of Europe. The benefits of the government’s tax incentives and relaxation of visa requirements to entice talent in the sector won’t be felt for a few years. But according to Goodbody analyst George O’Connor, in some fields like fintech and health tech, Britain has already surpassed other important financial hubs like New York.
