Does London have a future?  A challenging question. And one that our guest speaker, Stuart Popham, addressed at our 4th Cellar Club event.

Stuart entertained us with a brilliant and thought-provoking description of London’s path to success – from its  founding by Brutus of Troy – to its present day profile as a leading services centre.  The statistics are compelling;  85% of London’s workforce is employed in the services sector, the highest of any capital city in the world, 100 of the Fortune 500 companies are based in London, as are 4 of the 6 largest law firms and 2 of its universities are in the top ten in the world.  Notably, two million of the 7.6 million residents were not born in the UK –  so London is truly a hub, a gateway to, and magnet for, the rest of the world.

But is London’s success sustainable?  Stuart posited two future scenarios;  the depressing first, a City in decline, with immigration restricted, tax breaks removed and Financial Services companies gradually drifting away to other more welcoming locations around the globe:

“A strand of the fabric of London is pulled and the tapestry of the talent starts to trickle away and buyers and sellers start to set up in another place as they try to attract customers…”

The second more positive scenario is of a City which recognises and promotes its strength as a services hub – not in the commoditised areas (we can’t compete with the workforces of India or China) but a centre of excellence for setting standards for the rest of the world in key services sectors – engineering, law, accounting, media & creative and financial.  Achieving this will enable London to continue to attract the best talent and create demand for the workforce on projects all around the globe.

Stuart prompted the audience to discuss  likely outcomes, but before doing that he prevailed upon Government and other opinion leaders to recognise and understand the services industry and not to opt out of vigorously competing with other Cities who want to take what London has.

Stuart’s reputation precedes him and this subject obviously appealed,this being the best attended Cellar Club event yet. It was again held in the Vaults at the RSA – a venue appropriately redolent of London’s history.

Stuart Popham has been described as ‘the most connected lawyer in the City’:  he recently retired as senior partner of Clifford Chance and is currently Chair of TheCityUK, which represents the UK financial services industry.

The Cellar Club is a regular networking event run by Gracechurch, attended by opinion formers and senior decision makers from major financial, professional and advisory businesses.

This is an interesting comment from the Times:  our own reputation study highlights which PE firms have the best and worst reputations among investors and the reasons why:  it will be interesting to compare the fund raising success in 2011 with the reputation data?  Watch this space…

Party’s over for private equity

How are the mighty fallen. In 2007, private equity firms raised $700 billion and bragged that any UK company, even Royal Dutch Shell, could face a private equity bid. Last year, investors put in just $225 billion, according to research house Preqin, the lowest since 2004.

With many firms now close to the end of their funds, 2011 will be a crunch year. In London, there are glimmers of hope. BC Partners — whose reputation was only slightly tarnished by its disastrous investment in Foxtons — is said to be on course to equal its previous €6 billion fund. And there are hopes that Apax, which is looking to raise €11 billion, will lead a revival this year. But even if these top firms succeed, the industry must be facing a massive shake-out The Times Jan 7th 2011

Gracechurch is currently out and about presenting its 2010 Global Private Equity study to the leadership teams of some of the major global PE firms. The 2010 study follows on from the inaugural baseline study in 2008.

The study was conducted in partnership with HawkPartners www.hawkpartners.com

It comprises in-depth interviews with 350+ investors, intermediaries and corporate executives. This is a major study which profiles the key players in detail – analysing key stakeholders’ opinions of the firms in terms of their perceived strengths and weaknesses.

Leading firms use the research to plan and develop their reputations and to create focus around stakeholder communications programmes.

The 2010 study evidences a more mature sector where firms have moved beyond their entrepreneurial roots, positioning themselves as more mainstream financial players. Stakeholders are placing greater emphasis on integrity and trust and the best players are showing brand attributes that clearly set out what they stand for.

This is not to say that the sector has yet thrown off the negatives that have affected it’s development; there is significant room for improvement on transparency, governance and the quality of communications with investors. And there are instances of individual firms whose poor reputation scores are likely tainting the whole sector.

Unsurprisingly, brand distinctiveness is hard to come by, with most differences being explained by size rather than stand-out attributes. There are several obvious themes that PE operators could major on: operational effectiveness, is one example of an emergent theme that is salient for investors.  But if firms want to own this space then they really need to work harder on their communications to cut through to the investors.

We are working hard to ensure that PE management teams use this research to really focus on their core values and champion the idea that strong brands really matter.

Investors in particular have clear ideas about what they like and don’t like and the firms with the most compelling brand stories will find huge benefits accruing, not least the ability to raise funds, create successful investments and ultimately benefit the whole industry.

One message that has been getting through to our subscribers is that a strong brand helps protect against your whole reputation  being trashed on the basis of one bad deal.