Our Weekly Newsletter
Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.
UK property funds not reopening anytime soon
Experts predict that investors are unlikely to gain access to the £13bn of cash currently trapped inside UK property funds anytime soon. Several things, such as more transactions in the marketplace, need to take place before the surveying body will agree to lift the material valuation uncertainty clause from all sectors, which would also reopen property funds. As things stand, businesses are still “far from normal” and the commercial property market outlook remains subdued. (From FT Adviser, 8 June 2020)
After the crisis, private equity faces a moment of truth
A commentary piece speculating that after the current crisis, advocates of private equity firms will start to question the high fees attached, should they not clearly demonstrate outperformance of the stock market. It is highlighted that top firms have previously produced significant returns and that recent academic and investor reports indicate that US funds have failed to beat US public equities since the financial crisis. However, the article adds that simply matching public equities does not compensate for the high fees of up to 6% for investors. [From Private Equity News, 8th June 2020]
Pandemic-led property demand in the countryside
Despite the dire national house price forecasts, there are areas in the UK where the pandemic is significantly boosting new property demand. Most notably, there has been a surge in buyers who want to move out of cities to the countryside. Rightmove has claimed that in the week of May 27, three areas on the South Coast saw the largest year-on-year jump in buyer demand, with Canterbury, Truro and Bournemouth up 23, 20 and 17pc respectively compared to the same period in 2019. Questions are being asked about whether the increase in sales to the countryside and coast is enough to increase overall house price forecasts. (From The Telegraph, 8th June 2020)
Fintechs help struggling businesses back on their feet during pandemic
Leading UK fintech firms have helped rapidly inject capital into businesses struggling with severe cash-flow issues as a result of the pandemic. The role fintechs have played in supporting the distribution of the Government’s flagship support packages has highlighted the industry’s rapid development. However, the help fintechs have provided is intensifying calls for a shift away from the FCA’s Sandbox approach toward implementing a wider regulatory framework that reflects the expansion of the sector. (From the FT, 8 June 2020).
More than a quarter of UK workforce now furloughed
8.9 million workers are having their wages covered by the Government’s flagship furlough scheme, according to latest figures from the Treasury. More than a quarter of the UK workforce is now being supported by the scheme, while the cost so far has reached £19.6bn. The high use of the scheme is intensifying fears that unemployment could rise sharply due to companies laying off staff to conserve cash once it is wound down. (From the BBC, 9 June 2020).