Big steps in 2022 for corporate finance
David Petrie, ICAEW’s head of corporate finance, takes a look back at major developments in 2021 – and looks ahead to new initiatives in 2022
This has been another extraordinary year, by any measure. The appearance of the Omicron variant of COVID-19 in late November was a worrying reminder that the world is far from getting clear of the pandemic. In the face of that huge challenge – as well as the longstanding one of climate change – businesses, their employees and stakeholders have shown great resilience, adaptability and commitment.
As the Corporate Finance Faculty’s chair Mo Merali told the audience at the faculty’s Annual Reception in early November, expert advisers have played a big part too. Guest speaker Lord Willetts commended the faculty for helping to ensure that the accountancy profession remained relevant and faced up to the big socio-economic and business challenges of our times.
There has been a bounce-back to record levels of all M&A, private equity firms and banks flush with cash and a busy time for IPOs. Staffing deals has been a big issue for many of the faculty’s member organisations.
In this context, 2021 has also been a year of considerable work by the Corporate Finance Faculty on behalf of its members – and ICAEW as a whole.
The faculty’s work has ranged across many areas of investment, transactions and advisory – and in 2022 we’ll continue to focus on three ‘grand challenges; in particular: the future of the City of London; green investment; and innovation.
The future of the City of London and the race by global capital markets to attract investment and transactions
The Corporate Finance Faculty’s team has worked extensively on several initiatives focussed on the supply and variety of funding for economic growth, capital markets and related regulation.
As a big part of ICAEW’s ongoing engagement with the UK government on the effectiveness of the UK’s primary capital markets, the faculty coordinated the response to the Financial Conduct Authority’s formal consultation. We also responded to HM Treasury’s consultation about the UK Prospectus Regime.
In early 2021, the faculty convened senior representatives of many market participants in two roundtables – organised with EY’s Chris Locke, to inform Lord Hill and the Advisory Group to the UK Listings Review. The Institute’s work on capital markets is co-ordinated by my colleague Katerina Joannou and advised by the Technical Committee, chaired by Yvette Allen.
The faculty has been a significant contributor to ICAEW’s response to the BEIS wide-ranging consultation on Audit and Corporate Governance, including ICAEW’s argument against the proposed extended definition of Public Interest Entities (PIEs).
The influence of major geopolitical shifts on cross-border M&A has increased in 2021 (as featured in the February, June and October issues of Corporate Financier). On 1 December, the faculty organised a major forum about the UK’s new National Security & Investment Act, with government minister Lord Callanan visiting Chartered Accountants’ Hall to speak about the new legislation in a live-streamed event also supported by the Department for Business, Energy & Industrial Strategy, City of London Law Society, the Law Society, the Institute of Directors and the Chartered Institute of Securities & Investment.
In September, the faculty, PwC and Travers Smith jointly authored a highly informative – and very topical – best-practice guideline about public-to-private transactions. Ian Hart, Director General of the Takeover Panel, took part in an online forum on the subject.
Green finance, green infra and green deals
In November, to coincide with the COP26 conference in Glasgow, the faculty published a special edition of Corporate Financier magazine – ‘The Green Issue’. It included features about investment renewable energy, electric vehicles, the food sector and hydrogen fuels, as well as about the London Stock Exchange’s Green Economy Mark, the World Economic Forum and KPMG on carbon emissions, careers in ESG and the rise of Octopus Energy.
Climate change was also top of the agenda in early December, when David Petrie, Shaun Beaney and Katerina Joannou were invited to update staff at UK Government Investments (UKGI) and corporate finance professionals in other government departments about market trends and new developments (see also the interview with UKGI’s chief executive Charles Donald (pages 8-11): ‘From the City to Whitehall’, Corporate Financier, May 2021.
The faculty is working with many member firms, including a specialist team at Deloitte, on a new project about best-practice for environmental, social and governance (ESG) issues in corporate transactions – and plans to publish a detailed guideline on the subject in 2022.
Private equity, venture capital and innovation
Projects to help boost economic development, trade, business growth and investment in new industries have always been within the Corporate Finance Faculty’s remit. For example, I have once again been asked to join the Business Finance Council convened by Kwasi Kwarteng, secretary of state for business, energy & industrial strategy, and John Glen, City minister and economic secretary to the Treasury. The council is a forum for government to work with major lenders to ensure access to finance for SMEs.
The trend in healthcare, life sciences, and tech-focused investments for private equity has continued, with emphasis also on protecting funds’ earlier investments. ESG is increasingly an important consideration in investment strategy. We strive to promote informed commentary and understanding of this asset class among our members. As part of its longstanding collaboration with the authors John Gilligan and the late professor Mike Wright, the faculty supported Oxford University Press in the publication of Private Equity Demystified (4th edition), and secured continuing complimentary access to it for faculty members.
Corporate Finance Faculty manager Shaun Beaney has continued to lead ICAEW’s work on early-stage investment, growth finance and SME funding, including its engagement with Innovate UK. In 2022, the faculty will be developing a new initiative, Boosting Growth Capital for Innovation.
This year, Beaney co-wrote ICAEW’s formal response to the UK’s new National AI Strategy and co-authored a report about VC investment in immersive technologies. He’s also been a guest speaker about start-ups at events organised by, variously, Immerse UK, Liverpool City Region’s Growth Platform, the East London Inclusive Enterprise Zone, Watford Young Entrepreneurs, and RTC North.
Meanwhile, I have taken part in forums about capital markets, M&A and business finance organised by, respectively, the Chartered Institute for Securities & Investment, and ICAEW in the North West, and by ICAEW’s Northern and Yorkshire & Humberside regions.
The faculty is of course international by nature – a fact best demonstrated by the very active Middle East Panel for members in the region, ably chaired by Sam Surrey and closely supported by ICAEW’s staff based in Dubai.
Finally, I’m pleased to report that the faculty has continued to grow as an influential professional network. In 2020 and 2021, we have welcomed as new members: Agathos; BOOST&Co; Brunel Business School; Greengage Capital; Gresham House Ventures; IGF; MarktoMarket; mnAI; Newable Capital; Headpoint Advisors; PEM Corporate Finance; Ryecroft Glenton; Salonica Group; and TLT.