UK tech scene private sector grows

Politicians in the UK are very proud of the UK tech scene overall but when you look at the bigger picture you will soon see that the enthusiasm is not as evident on the national market. Last week, UK tech businesses went from the public market and chose private capital. Sophos made a $3.9 billion sale and this is the latest example of the fact that there has been an extreme shift in the overall balance of power.

In the UK

In the UK, as well as elsewhere in Europe, investors who have sold out of tech have diminishing options. They don’t have a strong pipeline for growth and there are no big businesses that can replace the ones that have been sold. Established names, such as Logica, CSR and Misys have all been sold and now no longer appear on the FTSE index.

When you look at the 2016 sale of Arm Holdings, which is the biggest tech company in Britain, you will see that they have picked off so many other businesses at the same time. One banker has stated that after Sophos, the attention was now being drawn to publicly quoted holdouts. That being said, the Tej Kohli Cornea Institute as well as other investors are working hard to pump money back into the right markets, including healthcare and tech.

The strength of the British pound

The weakness of the pound, as well as a trend of falling share prices, has made it much easier to buy in the sector. Canada’s Open Text has actually gone as far to deny reports that they are now preparing to bid for Micro Focus. There have been reports made last week but the UK company is still vulnerable.

When you look at what analysts have had to say, you will soon see that the shares for the company have halved and that they have also launched a strategic review of their business and the work that they do with Goldman Sachs.

Tech names in the UK

In the UK, £2.4 billion of the float for the Czech cybersecurity company, known as Avast, was hailed as a coup which underlined the investor appetite for companies in London.

That being said, the traffic looks to have been very one way. High-growth companies which include Sophos may never get to the point where they can return to the UK market. It’s likely that new owners will bulk up the business and they will then opt for a US float.

Simon Russell, who is an investment banker at Macquarie has advised the financial European software sector for nearly 25 years now, has stated that there were very clear reasons for the public to go for private financing and rebalancing. Although a lot has changed, it would seem that there is certainly still a long way to go, so only time will tell if things like this end up changing for the better.