Sustainable investment assets in five of the world’s biggest markets reached a total value of $30.7 trillion at the start of 2018, according to a major new report. Highlighted in the fourth, biennial review from the Global Sustainable Investment Alliance (GSIA), the jaw-dropping figure represents a worldwide growth of 34% since the beginning of 2016, accounting for the development of socially responsible investment products in Europe, the US, Canada, Japan, and Australia and New Zealand.
Under the GSIA’s tests, sustainable investment comprises the following activities or strategies:
“As in 2016,” says the report, “the largest sustainable investment strategy globally is negative/exclusionary screening ($19.8 trillion), followed by ESG integration ($17.5 trillion) and corporate engagement/shareholder action ($9.8 trillion). Negative screening remains the largest strategy in Europe, while ESG integration continues to dominate in the US, Canada [and] Australia and New Zealand in asset-weighted terms.” Corporate engagement/shareholder action, meanwhile, is the dominant strategy in Japan.
Europe emerged as the leading region for sustainable investment, with total assets growing by 11% from 2016 to 2018 to reach €12.3 trillion. However, its share of the overall market dropped from 53% to 49% of professionally managed assets. That slight drop, the report notes, may reflect a move in the region towards stricter standards and definitions.
Cross-border M&As have nosedived, according to figures from leading analyst Mergermarket. In its report for Q1 2019, the firm reveals that the blockbuster buyouts that propelled the industry over the past five years have dwindled dramatically: only nine ‘mega-deals’ above $10bn have been struck so far this year, compared to 14 in Q1 2018. All but two of this year’s biggest deals – Newmont’s purchase of Canada-based Goldcorp for $12.8bn and Saudi Aramco's acquisition of Saudi Basic Industries Corporation for $70.4bn – stemmed from US-based corporates absorbing competitors in their home market.
The figures show that only 3,558 M&A transactions, worth a total $801.5bn, were registered in Q1 2019: a 15% decrease in value compared to the same period of last year, which featured 5,085 deals worth $943.5bn. At a value of $12.1bn across 56 deals, outbound M&A from China and Hong Kong was particularly subdued, reaching its lowest level since Q3 2014. In Europe, only 17 deals emerged from acquirers in China and Hong Kong, with their total value of $2.3bn the lowest quarterly sum recorded since Q4 2013.
In the firm’s assessment, following a peak in the M&A cycle during the first half of last year, increased market volatility, geopolitical tensions between the US and China, Brexit anxiety in Europe and tougher economic headwinds have precipitated a slowdown. However, it notes, private equity firms are continuing to look for ways to deploy record amounts of ‘dry powder’ – or highly liquid, cash-like securities – ,which surpassed the $2 trillion mark at the end of last June.
Mergermarket global editorial analytics director Beranger Guille said: “With pockets of consolidation in some particularly hot sectors, vigorous private equity activity and a healthy domestic deal flow in the US should give hope to dealmakers for the rest of 2019.”
Credit availability across Europe, the Middle East and Africa (EMEA) region is facing a series of stiff challenges, according to a new report from Standard and Poor’s (S&P). Announcing the latest insights from the agency’s Credit Conditions Committee, S&P Global Ratings credit analyst Paul Watters said that factors unfolding in Europe, in particular, are putting a squeeze on funds within the wider EMEA. In its assessment of how those issues are affecting different industry segments in Europe, S&P notes:
Watters warned: “Weak and uneven growth across the region, low productivity, low inflation and high debt – combined with negative risk-free rates – [are] stretching out for 10 years, despite a whole decade having elapsed since the financial crisis.”
Following pressure from industry groups, Companies House has agreed to display a warning on its website explaining that the company data available there has not been independently verified. The decision has stemmed from representations by the Chartered Institute of Credit Management (CICM) and the European Freight Trade Association (EFTA), which have both highlighted how Companies House data can be used for fraudulent purposes.
In particular, the groups pointed out an “alarming” rise in short-firm fraud, whereby companies deliberately file false accounts and use credit to obtain goods that are then delivered to third-party addresses. In a statement, the groups noted that, in short-term fraud, there is no attempt to establish a credit history before a fraud is attempted. “Bogus accounts are simply filed at Companies House to obtain glowing credit reference agency recommendations to be used to trick unsuspecting businesses to supply goods and services on credit, with no chance of their being paid.”
CICM chief executive Philip King said: “Credit managers use information at Companies House on which to base risk decisions, and need to be aware that the information cannot always be trusted. Companies House data is useful as one part of the decision-making process when it comes to granting credit, but should never be relied upon as the only source of information.”
Companies House has also opened a special email address through which firms can raise their concerns over bogus accounts.
A surge of venture capital (VC) into the UK fintech sector has had a direct effect upon its staffing numbers, according to global recruitment agency Robert Walters. In 2018, the firm notes in a new report, London’s fintech industry attracted almost twice the VC funding (39%) awarded to its closest European rival, Berlin (21%), and easily surpassed Paris (18%), Stockholm (5%), Barcelona (4%), Amsterdam (4%), Zurich (3%), Copenhagen (2%) and Dublin (2%).
Indeed, the firm notes, fintech’s “explosive” UK growth has ensured that London now has the second-highest concentration of the sector’s $1bn-plus start-ups, or ‘unicorns’. Of the 29 fintech unicorns currently active around the world, nine trade in San Francisco, while seven are based in the UK. In the past 12 months, those seven firms achieved a combined revenue growth of 130% – boosting their income from £77.1m to £177.6m.
Robert Walters’ CEO, Chris Hickey, said: “This boost to the fintech market resulted in a 61% increase in [fintech] job creation in London and an 18% increase in [fintech] jobs outside of London in 2018, making it the fastest-growing sector in the UK. While Brexit has no doubt been a concern and slowed down hiring levels somewhat within financial services, the fact that the UK has one of the best IT and banking talent pools in the world continues to be a big draw for investors.”