Asian investors will turn their back on the US and channel billions of pounds worth of investment into Britain’s tech sector following the election of President Donald Trump, an advisory firm has predicted.
Europe’s tech sector could see Far East investment double to a record $116 billion (£93bn) this year, with the UK taking a significant slice of the capital, according to Magister Advisors.
Asian corporates and investors are likely to be less welcome in the USVictor Basta
The tech mergers and acquisitions (M&A) specialist said Trump’s threat of punitive trade tariffs against China, coupled with the allure of cheaper UK deals driven by the Brexit-hit pound, will see Asian investors shift their focus from America to Europe.
The prediction came as Scottish legal firm Burness Paull said it believed that 2017 would see an increase in financial technology (fintech)-driven M&A activity. The firm was instructed on more than 200 M&A deals in the past 12 months, with an aggregate value in excess of £6.5bn. It completed major fintech deals for clients including Standard Life’s financial planning offshoot 1825 and Benchmark Capital.
Victor Basta, managing partner at Magister Advisors, said Asian capital “will be thinking twice before committing more money to the US”.
“Much of the sentiment and rhetoric since the US election should concern any Asian corporate,” he added. “There is a feeling Asian corporates have benefited too much from US trade, and this needs to be redressed.
“Irrespective of how true this is or not, the fact is Asian corporates and investors are likely to be less welcome in the US in the next four years than in the last eight.”
He said European tech firms are crying out for more late-stage funding, while “an unprecedented number of quality tech companies” will be searching for a cash-injection in order to break even.
He believes 2017 will bea “watershed year” for Asian investment in European technology, adding: “Perversely we think the most active ‘European’ destination will be the UK.”
Dealmakers have seen a growing interest in British companies from US and Asian firms looking to capitalise on sterling’s slide following the EU referendum result.
Japanese telecoms giant SoftBank marked the biggest investment from Asia into the UK when it secured a £24bn tie-up with Arm Holdings last year.
Peter Lawson, head of corporate at Burness Paull, said the financial services sector was evolving rapidly.
“Although inherently cautious, the sector is now engaging with for example, cloud sourced products and services in order to achieve operational benefits and greater scalability,” he said.
“This, combined with regulatory driven open banking initiatives, is creating a far more dynamic environment and will be a defining time for the industry.”