UK venture capitalists to ask government for bail out

February 14th, 2009 by admin | Filed under Daily News, Recession, Retail, UK Banks, UK Small Business.

In an analogy of terms, the FT quoted Amadeus Capital; a UK based venture capital company has submitted a request to the government for a one billion pound bailout. The claim that the cash injection will prevent hundreds of UK technology start -ups from closing down due to lack of funding.

A representative of the company stated that “The question of these companies’s survival is of great importance to the UK, as their success will create jobs.”

The global financial crisis has caused a severe shortage in investment in venture capital funds, meaning that many venture capital-backed companies are finding themselves increasingly chocked for finance.

Obviously not short of money is former Boomtown Rat and Live Aid organiser, Sir Bob Geldof who has expanded his media empire with the purchase of Production Company based in Belfast.

Geldof’s company Ten Alps, paid £796,000 to buy current affairs programme maker Below the Radar. The company, established only in 2006 by two local journalists Trevor Birney and Ruth O’Reilly, The Company employs only eleven full-time staff in its in-house editing studios.

During the short time that they have been producing documentaries, the company has made current affairs and factual films for the BBC, RTÉ and Channel 4 News. Among commissions it is currently working on is a documentary on Sinn Fein president Gerry Adams.

Ten Alps, based in London and Manchester, has produced the BBC’s acclaimed series Iran and the West, and worked for ITV, Channel 4, Sky and international channels such as US Discovery networks, plus radio for BBC Radio 2 and 4.

The acquisition is conditional on a share placing on AIM and is expected to be formalised in the early part of next week.

ICAP Plc a U.K.-based inter-dealer broker announced on Thursday that it expects pretax profit for the financial year ending March 31 to be around 346 million pounds in the financial year up to 31st March, compared to the previous year’s profit was GBP330 million. ICAP provides broking services to banks and other dealers in a variety of financial instruments, including over-the-counter derivatives, fixed-income securities, money market products and equity derivatives

Group revenue in the quarter ended Dec. 31 was about 20% higher than in the same period in the previous year, “when the markets were very active.”

Average daily volume from its electronic broking business in the 12 months to January was $780 billion, down 4% from the same period in the previous year. On this positive news, ICAP shares were up 3.2%, (up 7 pence to 228 pence.)

Meanwhile looking like they might eventually be going down the toilet is the Wolseley group, until recently the world’s largest plumbing-equipment supplier. Wolseley has been hard hit by the collapse in housing markets, both in the UK as well as in North America.

It has until the summer to negotiate a financing package with their bankers, with delays meaning that the group will breach its banking covenants.

The city obviously feels that there is a massive short position in Wolseley group shares as a result of a spate of profit warnings offset by moves to substantially reduce the company’s work force .Shares rose twelve pence to 219 pence on the news.

On the city investors were increasingly gloomy about the deteriorating economic outlook with shares falling.

Among the sufferers was British Land, who fell back by 27pence to 456pence. British Land is looking to raise £740 million through a two-for-three rights issue on a 225pence share value. Property owners, Hammerson Plc who raised £580 million in a rights issue earlier this week, fell 18 pence to 397 pence.

Mining shares were weak this week with Rio Tinto plunging 30p to 1939p after allowing its largest shareholder Chinalco to inject $19.5bn into its coffers, increasing their stake to 19%. Xstrata, the Anglo-Swiss mining giant fell 23½p to 732p.

On the back of a profits warning, Diageo, the Guinness and Smirnoff the world’s biggest drinks giant dropped 30pence to 877pence. Recently announced third-quarter figures from the BT Group, the U.K.’s largest phone company, were less than impressive, causing the shares to drop eight pence to 96pence.

On Thursday’s trading the FTSE 250 index rose by 1.23% or 79.96 points to 6581.84 while the FTSE 100 finished the session up1.47 per cent, or 61.83 points, higher at 4,264.07

Sterling remained stable against all the major trading currencies closing at:

Pound/US dollar 1.4533
Pound/Euro 1.1264

Pound/Japanese Yen 132.96

Pound/Swiss Franc 1.6850

On Wall Street shares had an indifferent day on Thursday’s trading

The Dow Jones Average dropped 6.77 to close at 7932.76. NASDAQ rose slightly 11.21 points to 1541.71