June 2007

NEWS

UK companies lead the way in wealth creation
British companies outperformed their European competitors in terms of wealth creation for the fourth consecutive year in 2006, according to the 2007 Value Added Scoreboard from the Department of Trade and Industry (DTI). The survey shows that, of the 750 leading wealth-creating firms in Europe, 210 are headquartered in the UK. In 2006, UK companies accounted for almost a quarter of all wealth created in Europe, compared with less than one-fifth for European rivals Germany and France. These three countries were substantially ahead of all other European countries, with Switzerland, Italy and the Netherlands leading a trailing pack.

The annual league table uses ‘value added’ by companies – calculated as the difference between sales and the cost of bought-in materials and services – as a measure of their economic success. Wealth created by British companies in 2006 rose by 12.4 per cent, compared with 5.4 per cent in Germany and 9.6 per cent in France. UK companies were also more efficient wealth creators in terms of employee and equipment costs. Large British companies converted every $100 spent on labour and equipment into $186 of added value, compared with $133 in Germany and $153 in France.

In part, UK companies were more successful because they focused on sectors such as pharmaceuticals and services where value added was growing strongly, while German and French industrial strengths tend to lie in sectors such as car manufacturing and chemicals, where competition is stronger. However, UK companies also outperformed their European competitors in similar sectors in terms of efficiency, with 23 of the 61 companies with the highest value added in their respective sectors being British. The UK’s status as a global centre of excellence is underlined by the fact that nearly 40 per cent of the top 800 firms in the UK are foreign-owned.

Companies scoring well on added value also tended to do well on the stock market, according to the DTI. A portfolio of the best-performing companies from 19 sectors, over a period of five years from 2003, showed an increase in value of 166 per cent, compared with 89 per cent for FTSE 350 companies. Some 55 per cent of value added is concentrated in the top 100 European firms, while 45 per cent is concentrated in six of the 39 sectors analysed: banks, oil and gas, automotive, fixed-line telecoms, electricity, and travel and leisure.

The three largest European companies by value added in 2006 were all oil companies: Royal Dutch Shell and BP from the UK and Total of France. Shell notched up $68 billion of added value in 2006 – comparable with the entire GDP of Ukraine – while BP’s $53.2 billion matched the GDP of Morocco. The next highest British companies on the list were banks: HSBC at number seven and Royal Bank of Scotland in 11th position. Fourth, fifth and sixth places on the Scoreboard were occupied by German companies: Siemens, DaimlerChrysler and Deutsche Telekom.


Interest rates up again as EU and US talk trade
The Bank of England’s Monetary Policy Committee (MPC) increased interest rates again in May, by a quarter of a percentage point to 5.5 per cent. The increase was the first since February, and took the cost of borrowing to its highest level since 2001. Analysts had widely expected the rate rise as the Bank sought to cool inflation and consumer spending. Business and employers’ groups accepted that the rise was necessary – although they warned that caution was needed in future so as not to slow UK economic growth. Observers were split as to what will happen next for interest rates, with some expecting a further hike to 5.75 per cent and others predicting that the Bank would feel it had done enough to bring inflation back down to the government’s target rate of 2 per cent, especially with big cuts in gas and electricity prices in the pipeline.

Before the latest interest rate rise was announced, manufacturers reported a 0.6 per cent rise in output for March, rebounding from a weak start to the year. The better-than-expected performance was due to an improvement across all sectors, particularly machinery and equipment, which climbed by 1.2 per cent. The increase was the fastest monthly rate of expansion for ten months, according to the Office for National Statistics, but it followed a contraction of 0.7 per cent in February which meant that, for the first quarter of 2007, output fell by 0.3 per cent year-on-year. Manufacturing accounts for about 15 per cent of the UK’s GDP as a whole.

The United States and the European Union signed a new transatlantic economic partnership at a summit in Washington at the end of April, in a pact designed to boost trade and investment by harmonising regulatory standards, laying the basis for a single US–EU market. The two sides agreed to set up an ‘economic council’ to push ahead with regulatory convergence in nearly 40 areas, including intellectual property, financial services, business takeovers and the motor industry. Some estimates suggest, for example, that incompatible regulations between the two blocks add 10 per cent to the cost of developing and producing new cars.

The world’s two richest regions also signed an Open Skies deal, designed to reduce fares and boost traffic on transatlantic air routes. Little of substance was agreed on climate change, although the European delegation, led by German Chancellor Angela Merkel, said it was pleased that the US now officially acknowledged that climate change was happening and that human activity was a major cause of it. However, the US has consistently rejected European proposals to impose national limits on greenhouse gas emissions, arguing that such a move would harm the international economy.


Slowdown in M&A activity may only be temporary
The value of mergers and acquisitions involving UK companies being taken over by foreign-owned companies was significantly lower in the first quarter of 2007 than in the fourth quarter of 2006. There were 45 deals worth a total of $10.6 billion, compared with 67 deals totalling $31 billion in the previous three months, according to the Office for National Statistics. Significant transactions at the beginning of 2007 involved the acquisition of NCP Car Parks by Macquarie Bank of Australia for a reported $1.6 billion; the purchase of Cory Environmental Holdings by a consortium led by ABN AMRO for $1.2 billion; and the acquisition of Blackwell Publishing (Holdings) Ltd by John Wiley & Sons for $1.1 billion.

Expenditure by UK companies abroad was also down, from $15.2 billion in Q4 2006 to $5.6 billion in Q1 2007. The biggest deal was Land Securities Group’s acquisition of STAR SMIF Investments Luxembourg, for a reported value of $1 billion. M&A expenditure within the UK, involving UK companies taking over other UK companies, also fell, from $11.8 billion to $10 billion.

The value of M&A deals involving foreign firms in the UK was the lowest quarterly total for three years, leading to fears in some quarters that the M&A boom was reaching the peak of its cycle. However, there are several large deals in the pipeline that are still to be concluded, and these could push up 2007’s full-year figures to the record levels seen in 2005 and 2006. They include Tata Steel’s $13.4 billion takeover of Corus, Japan Tobacco’s $16 billion acquisition of Gallagher and the $23.4 billion takeover of Scottish Power by Iberdrola.

In addition, May saw the announcement of two major new M&A deals involving UK companies. HeidelbergCement of Germany made a $15.7 billion cash offer for building materials conglomerate Hanson, which was recommended by the company’s board. Hanson is the third biggest producer of aggregates in the US and the second biggest in the world, and holds extensive reserves. HeidelbergCement sees it as a natural fit for its business portfolio, which in the UK includes the Castle cement plant.

Meanwhile international drinks group United Spirits snapped up Scotch whisky distiller Whyte & Mackay (the fourth biggest Scotch producer in the world) for $1.19 billion. United Spirits, headed by Indian entrepreneur Vijay Mallya, already owns other Scotch whisky brands and is considering a listing on the London Stock Exchange to fund future purchases. Demand for spirits is growing worldwide, and United will concentrate in particular on new international markets such as India, China and South America.


Foreign-invested firms feature in Queen’s Awards
The annual winners of The Queen’s Awards for Enterprise were announced on 21 April, HM The Queen’s birthday. The Awards honour outstanding UK companies and are the country’s most prestigious accolades for business-related achievement. They are intended to recognise the achievement of the company as a whole – management and employees working as a team. This year a total of 683 businesses applied for the scheme, somewhat fewer than in previous years, and 119 Awards were conferred, split between the three broad-based categories of International Trade, Innovation and Sustainable Development. There was also an Enterprise Promotion Award for outstanding individuals, a category in which 11 Awards were granted.

As always, a number of the award winners were foreign-invested companies or subsidiaries of overseas firms. In the International Trade category, awards were made to Americhem Europe Ltd, a producer of colour additive concentrates for the thermoplastic industry based in Manchester, North West England, and to the Daventry plant of Cummins Ltd, in Northamptonshire in the East Midlands, which produces high-horsepower diesel and gas engines.

Also honoured were US-owned Herman Miller Ltd, a maker of office furniture based in Chippenham, Wiltshire in South West England and the Japanese-owned Yamazaki Mazak UK Ltd, based in Worcester, which produces computer-controlled machine tools. In the Innovation category, there was recognition for Rofin-Sinar UK Ltd, a division of the worldwide Rofin group of companies based in Hull, Yorkshire and Humber, for its sealed diffusion carbon dioxide laser, designed for use in a wide range of industrial applications.

Gaz expands production of LDV vans
Gaz, the Russian car company that took over UK van manufacturer LDV (formerly Leyland DAF) last year, expects the company to return to profitability in June, for the first time in several years. Gaz claims to have almost doubled production and to have created 75 new jobs since taking over the Birmingham-based commercial vehicle firm for an estimated $100–$200 million last year. It plans to begin exporting Maxus vans (and variants) from the West Midlands to its plant in Nizhny Novgorod in Russia by the end of August, and expects to sell around 2,000 vehicles in Russia by the end of the year. The company is road-testing the vehicles in Russia and will adapt them for the local market. It will then switch next year from importing LDV-made vans to assembling vehicles in Russia from completely knocked down kits. LDV produced just under 7,000 Maxus vans in 2006, mostly for the UK market; the vehicle is a rival to Ford’s popular Transit van.

Ford’s diesel engine plant at Dagenham in Essex, Eastern England has introduced a new line to produce low-carbon 1.4-litre and 1.6-litre Duratorq TDCi turbo diesel engines, as part of a $260 million investment programme. Production of the larger engine is already under way, with the 1.4-litre version due to go into production in June. The engines will be used to power the most fuel-efficient versions of the Ford Fusion, Fiesta, Focus and C-MAX models, and will also be used in Volvo and Mazda vehicles. The extra production at the Dagenham Diesel Centre (DDC) is also being driven by a cooperative agreement between Ford and PSA Peugeot Citroën, and the plant remains on target to produce 1 million engines annually by 2009.

Traffic through UK ports shows slight decline
Provisional statistics from the Department for Transport (DfT) show that total freight traffic handled at UK ports fell by 4.7 million tonnes (Mt) to 580.2 Mt in 2006, 1 per cent lower than in 2005. Inwards traffic rose by 7.9 Mt to 362.3 Mt, while outwards traffic fell by 12.6 Mt to 217.9 Mt. Freight traffic through the 52 major UK ports totalled 565.2 Mt (down 4.9 Mt on 2005); this represented over 97 per cent of total UK port freight traffic in 2006.

Grimsby and Immingham maintained its position as the UK’s leading port with 64.0 Mt (3.3 Mt higher than in 2005), followed by Tees and Hartlepool with 53.3 Mt (down 2.4 Mt) and London with 51.9 Mt (down 1.9 Mt). They were followed by Southampton (40.5 Mt), Milford Haven (34.3 Mt), Liverpool (33.6 Mt), Forth (31.1 Mt), Felixstowe (24.4 Mt), Dover (23.8 Mt) and Sullom Voe (19.4 Mt).

Meanwhile, road traffic increased by 1.2 per cent in the first quarter of 2007 compared with the same period of 2006, according to the DfT. Car traffic grew by 1 per cent and light van traffic by 4 per cent, though goods vehicle traffic declined by 4 per cent. The volume of traffic on motorways was virtually unchanged.

Transport for London (TfL) has awarded a $400 million contract to engineering firm Taylor Woodrow to upgrade the Docklands Light Railway so that an extra carriage can be added to each train. The transition from two- to three-carriage trains will be completed by 2010, and will provide extra capacity as the DLR is extended to Woolwich Arsenal and Stratford International stations. The DLR will also serve as a key transport link for the 2012 Olympic Games. Work to increase capacity, which will include strengthening viaducts and bridges, extending platforms and improving junctions, will take place in two phases, with the first phase scheduled for completion in late 2009.

UK capital sees Asia as both rival and opportunity
Foreign direct investment (FDI) into London has increased to $104 billion from $76 billion just two years ago, and India is now the second biggest source of investment after the US, according to investment agency Think London. India accounted for 16 per cent of all new foreign investment into the capital between 2003 and 2007, compared with 31 per cent from the US. France was in third place (12 per cent), while China (6 per cent) climbed to fourth ahead of Japan. Foreign-owned firms were responsible for nearly half of London’s economic growth between 1998 and 2004, according to the agency, and workers at foreign-owned companies were more than twice as productive as employees of other companies. It cited the quality of the city’s infrastructure, the availability of skills and the strength of the business environment as reasons why foreign firms choose to invest there.

However, Michael Charlton, chief executive of Think London, said that the city must do more to promote itself in emerging economies such as China if it is to retain its position as a leading global business centre. His message was reinforced by London Mayor Ken Livingstone, who warned that the UK capital would face much tougher competition from Asian cities such as Shanghai, Mumbai, Hong Kong and Singapore within ten years. “London is on a tremendous high … but any hint of complacency would be fatal. London has a window of opportunity, of perhaps five to ten years, during which to consolidate its lead as the world’s most successful international city, before it feels the full weight of the wave of competition from Asia,” said Mr Livingstone.

The capital has meanwhile become the largest wireless internet hotspot in Europe, according to technology firm The Cloud which, in conjunction with the Corporation of London, has set up a WiFi network covering the whole of the City financial district. A network of 130 base stations provides users with internet access via laptops or mobile phones and, using ‘mesh’ technology, transfers them automatically from base station to base station as they move around. Access was provided free for the first month in association with Nokia. The system, claimed to be the densest in Europe, took 12 months to develop and test, and is built onto existing street furniture such as lampposts and street signs. The Cloud is currently in talks with other London boroughs to roll out the system, although no firm plans have yet been announced.


New moves underline London’s global business status
New York-based Lehman Brothers has announced that the new global head of its fixed income division will be based in London, making it one of several US banks to move control of key divisions to the UK in recent months. Roger Nagioff, currently the bank’s chief operating officer in Europe, will be the first Lehman Brothers executive to serve as global head of one of its operating divisions from outside the US, in a move that highlights the company’s commitment to growing operations in the UK, Europe and Asia. Fixed income remains Lehman Brothers’ main business, although it has also expanded its equities, deal advisory, asset management and other units in recent years.

Other US-based banks have also moved senior executives to London, reflecting the faster growth of capital markets in Europe and Asia. Goldman Sachs, for instance, recently moved its chief administrative officer to the UK capital, while more than half of the 21 top managers at Citigroup’s new fixed income, commodities and currencies division will be based outside New York.

US investment bank JPMorgan is to build a new European headquarters in the City of London. It is currently in talks to occupy a new 1 million sq ft office building at London Wall, near the Barbican arts centre, which could house up to 10,000 staff. The 20-storey scheme, designed by architects KPF, will be built on the site of a 1960s building owned by the Corporation of London. It will have four trading floors each of 72,500 sq ft, almost the size of a soccer pitch. The move will consolidate JPMorgan’s existing operations at seven different sites around the City. It will include the relocation of its 5,200-strong investment bank division, but will exclude its asset management business and the treasury and securities services arm.

A new International Centre for Financial Regulation has been launched in London to carry out research and to offer training on international regulation. The centre, the first of its kind in the world, will be set up by a committee chaired by Mervyn Davies, chairman of Standard Chartered. It will aim to influence regulatory developments and shape the next generation of financial regulators around the world. Finance will be provided by the City of London Corporation and by the financial services industry, with the government contributing $5 million over the first three years to get the centre up and running.


Pioneering alliances for Scottish life sciences companies
Scottish Enterprise has chosen Alexandria Real Estate Equities, which claims to be North America’s leading life science property specialist, as its development partner for the commercial research campus at the Centre for Biomedical Research, a collaboration with the University of Edinburgh and NHS Lothian. Development of the site, at Little France on the outskirts of Edinburgh, is expected to generate $500 million of investment and to create 6,500 new jobs. Planning permission has been granted for approximately 1.4 million sq ft of academic, institutional and commercial life science space on the 100-acre site, which will be rebranded Edinburgh BioQuarter, in a bid to create an internationally attractive cluster for the biosciences industry.

Alexandria will have exclusive rights to develop a life science cluster, capitalising on strong existing infrastructure in the area. The company owns and operates more than 11 million sq ft of office/laboratory properties in North America, including Technology Square@MIT in Cambridge, Massachusetts, with 6 million sq ft more under development, including Mission Bay in San Francisco and the East River Science Park in New York. This is the first time that Alexandria has invested in property outside of North America, and it will establish its initial European HQ in Edinburgh.

Another Scottish firm, Scottish Biomedical, is pioneering a new screening technique that offers unique insights into the effectiveness of stem cell treatments. A $3 million investment will help it to study the action of early-stage drugs in the human body more closely than ever before. Already recognised for its cell signalling expertise, Scottish Biomedical hopes to market its new screening capabilities to biotechnology and pharmaceutical firms, advancing the process of drug discovery.

A pioneering R&D partnership between Stirling Medical Innovations (SMI) and ITI Life Sciences has resulted in the development of a groundbreaking medical device that monitors patients at risk of developing blood clots. SmartCheck is a handheld device similar in size to a mobile phone; the test uses a single drop of blood and results are generated within one minute. SMI, established in 2005, is part of Inverness Medical Innovations, based in Massachusetts, a leader in the manufacture of medical diagnostics products. It was attracted to Scotland by the opportunity to partner ITI Life Sciences in an innovative cardiac biomarker research programme, of which SmartCheck is the first result.

Life sciences company GlycoMar, based in Oban, has formed a strategic alliance with Japanese company Eolas Biosciences. GlycoMar was set up in 2005 to exploit the potential of sugar-based compounds derived from marine invertebrates; in March 2007 it launched an in-house screening facility, securing contracts with two UK-based drug discovery and biotechnology companies. Eolas Biosciences specialises in drug discovery and biomedical business development, and has a proven track record in its home country. It will provide business development support to introduce GlycoMar’s drug discovery technologies and products to the Japanese market and will facilitate collaborative agreements with Japanese pharma companies.
 

Launch imminent for pioneering wave farm projects
Significant progress has been made with two new wave farm projects located at opposite ends of the UK, underlining the UK’s pioneering role in this new form of renewable energy. One scheme, off the coast of Orkney in Scotland, is due to start operating next year, making it the UK’s first commercial wave farm. The farm will use four sausage-shaped generators – developed by Scottish firm Ocean Power Delivery, and named Pelamis after a kind of sea snake – to convert wave power into electricity, which will then be transported to the mainland. Costing $20 million to set up, the installation will generate 3MW of electricity, enough to power 3,000 homes. Once the plant is up and running, scientists will look at how the generators work together, how much energy is produced and the effect it has on the National Grid. Scotland is a leader in the field of sustainable energy, and expects to meet its target of generating 18 per cent of its power from renewable sources during 2007.

In Cornwall, South West England, another wave farm project is taking shape. The South West of England Regional Development Agency (RDA) approved $43 million of funding at the end of April for the Wave Hub project, which means that it has now the $56 million funding it requires, subject to final government and EU approval. If planning permission is granted, the project could be built as soon as next summer, potentially generating earnings for the regional economy of $154 million over the next 25 years and creating hundreds of new jobs.

The project consists of a high-voltage cable connected to the National Grid and running 10 miles out to sea. Here companies will be able to test their wave energy devices on a scale never seen before. Three companies were already working with the RDA on the scheme, and the fourth, Oceanlinx of Australia, was announced in May. Oceanlinx will deploy its wave energy converter, which combines established oscillating water column (OWC) technology with its own patented turbine technology. It has successfully tested a full-scale operational unit at Port Kembla in Australia, and is also pursuing wave energy projects in North America, Mexico, South Africa and Hawaii. Wave Hub will be the company’s first installation in Europe.

Despite the public’s growing concerns over climate change and a general increase in carbon awareness, however, businesses are failing to follow suit, according to a new report by the Economist Intelligence Unit (EIU) for UK Trade & Investment (UKTI). The report surveyed more than 600 senior executives from a range of industry sectors worldwide. It found that nearly a third (32 per cent) of companies surveyed did not monitor direct carbon emissions or indirect effects such as supply chain emissions, and have no plans to do so. The report also highlighted the central role of government regulation in shaping businesses’ response to carbon issues, with compliance with rules being the biggest single factor influencing their carbon-reduction strategies.

UKTI chief executive Andrew Cahn said: “This report further emphasises the need for government to continue working with business to ensure we have the right incentives and framework to maintain our competitive position and at the same time tackle climate change. The UK remains a leader in developing solutions to the challenge posed by climate change.”


Regional news
In the run-up to the London 2012 Olympics, the National Basketball Association (NBA) of the US is looking to raise its global profile by opening an office in London to focus on business development in the UK and across Europe. The NBA plans to work closely with the British Olympic Association and other basketball groups in the region to promote the sport, the second most popular in the world. London investment agency Think London is supporting the NBA’s growth plans, and London Mayor Ken Livingstone attended a launch event in New York. The capital’s new O2 arena will host a pre-season exhibition game in October between the Boston Celtics and the Minnesota Timberwolves.

Mexican software firm Softtek has opened a UK sales office just outside London. To date the company has signed up six new customers, including GE Capital, and over the next year it plans to extend its operations to include ten full-time staff and 100 consultants. If all goes well, it then plans to move its European headquarters to the UK from its current base in Spain. According to Peter Smith, head of Softtek’s UK operations, the UK “is the place where people want to be”.

Anglo-Swedish pharmaceutical giant AstraZeneca has bought London-based Arrow Therapeutics for $150 million. Arrow Therapeutics is currently investigating several promising approaches towards new medicines to treat the hepatitis C virus (HCV) and respiratory syncytial virus (RSV). It has 57 employees at its facility in London; AstraZeneca says it plans to make the site a hub for anti-viral discovery activities.

MorphoSys, a leading producer of antibodies for biotech drug research and manufacturing, based in Frankfurt, Germany, has opened a new UK headquarters in Oxford, South East England. Through its Abd Serotec business unit, MorphoSys designs therapeutic antibodies to treat specific diseases and antibodies for use in clinical and pre-clinical research. Its clients include Roche and Pfizer. Strong sales growth has spurred the company to bring together all its UK operations at a single site in Oxford, where it will target the region’s cluster of academic research and biotech companies. The video games arm of US software giant Microsoft has set up a new European games hub in Reading, South East England. Microsoft is keen to strengthen relationships with prominent European games developers – most of which are UK companies – and hopes to use the base to expand its games content throughout Europe. Two leading UK games developers are located a short distance from the new base – Lionhead in Surrey and Rare in Twycross – while a number of others are in close proximity.

The East Midlands Development Agency (emda) was involved in 44 inward investment projects in 2006/07, almost matching its record of 45 projects in 2005/06. Job creation was its best ever, with 4,410 jobs created or safeguarded, up 27 per cent on 2005/06. Among the year’s successes, Hong Kong-based PD Enterprises acquired local chemicals firm Courtaulds, safeguarding 354 jobs and creating 80 new ones in Belper, while Champion Enterprises of the US created 46 new jobs after acquiring Caledonian Business Systems of Newark. emda welcomed numerous overseas companies to the region (for example, Swedish organisation Telematics Valley in March), while its overseas activities included visits to Mumbai and Bangalore.

Sunderland in North East England won a Lifetime Achievement Award at the Intelligent Community Forum’s annual awards ceremony in New York in May. The award, only the second of its kind made by the ICF, marked Sunderland’s significance as the original ‘intelligent community’ and its appearance on the Top Seven Intelligent Communities list an unprecedented five times. Once an industrial powerhouse and the biggest shipbuilding port in Europe, the city fell into decline in the 1980s. However, a turnaround effort that engaged every part of the community has transformed it into one of the most attractive business locations in the UK, with unemployment 1% below the national average. ICF co-founder Robert Bell, presenting the award, said that the strategies and tactics developed by Sunderland were the inspiration for the founding of the organisation. In the evening’s main award, Waterloo in Canada was named ‘intelligent community of the year’, beating Dundee in Scotland, among other contenders.

RDA One NorthEast is seeking private sector investment in a new initiative to enhance its management of its portfolio of business development sites. ONEDIN (One Northeast Development Initiative) aims to establish a property regeneration partnership (PRP) that will undertake development activity; it is seeking a private sector partner experienced in complex regeneration projects and in delivering new business space. It has launched a tender process and aims to have the PRP up and running before April 2008. The PRP will own and manage One NorthEast’s current property portfolio, which includes around 30 sites stretching from the Tees Valley to the Scottish Borders.

Cramlington Precision Forge, a UK subsidiary of Indian firm Sundram Fasteners, has won the Confederation of British Metalforming (CBM)’s Component of the Year Award for its commercial vehicle clutch design. The engineering firm, based in Northumberland, North East England, used a combination of technological improvement, automated production and lean manufacturing principles to create a new die to forge teeth on differential clutch drives. The company was taken over by Sundram, part of the TVS Group, three years ago, and since then has worked closely with the North East Productivity Alliance (NEPA) to improve its efficiency.

Cramlington recently won $2 million in new business to supply clutches to the MAN Group, one of Europe’s biggest manufacturers of commercial vehicles, and is also due to start work on a $1 million contract to make complex gear and clutch parts for Swedish truck manufacturer Scania.

Bank of Scotland Corporate and Bear Stearns Asset Management Inc (BSAM) have formed a joint venture to invest in a $280 million portfolio of eight seasoned European mezzanine funds. The joint venture vehicle is named BoS Mezzanine Partners Fund LP and is owned jointly by a subsidiary of Bank of Scotland and a Bear Stearns investment vehicle. The venture will seek to expand the bank’s business to include third-party management services to institutional investors.

A review carried out for Scottish Enterprise Glasgow shows that Glasgow’s International Financial Services District (IFSD) is well on track to reach its ten-year target of attracting 20,000 jobs to the area, as the district celebrates the fifth anniversary of its launch. The IFSD has grown into a thriving business-oriented community, and is on course to deliver 2 million sq ft of Grade A office space by 2011. Recent new tenants include Barclays Wealth, law firm Burness and international property consultancy Knight Frank.

Glasgow has also celebrated the opening of another new contact centre, reinforcing its position as a European leader in the contact and call centre industry. Mobile phone company O2, owned by Telefonica of Spain, has set up a flagship customer service centre at the city’s central Skypark location. The new centre is already about halfway towards its target of recruiting a workforce of 1,500 by the end of the year.

Electronic manufacturing and design company Plexus UK has formally opened its new European Design Centre at the Alba Campus in Livingston, Scotland. The new centre is twice the size of the company’s previous accommodation and consists of 3,760 sq ft of design space, housing 12 design engineers. Plexus hopes to more than double its team in Livingston to 31 engineers over the next two years. In all, the company employs 350 people in Scotland, at Livingston and at a prototyping and manufacturing facility in Kelso. It supplies products to a wide range of industries, including the networking, wireless infrastructure, medical, industrial, security, defence and aerospace sectors.

Invest Northern Ireland had its most successful year ever in 2006/07, securing a total of 28 new overseas-owned projects, which were expected to create 3,497 new jobs and to safeguard 199 existing ones. Of these projects, 17 were first-time international investments which represented a planned investment of $256 million, including Invest NI assistance of $54 million. A further 11 externally-owned companies committed to expand their existing Northern Ireland operations, and were offered nearly $20 million of Invest NI assistance towards total planned investment of over $96 million. New investors included Firstsource, Tyco, Axa, Imagine Telecom and Coca-Cola, while companies reinvesting included Citigroup, Liberty IT, Teleperformance, Almac, Galen and Bombardier.

One of these companies, US-owned Liberty Information Technology (LIT) has announced a $13.2 million investment in Belfast that could create up to 175 jobs. The software firm’s fourth investment in the province since 1997 will see it expand its operations and develop capabilities in new technologies and business analyst skills for the insurance and financial services industries. LIT provides software application development and maintenance services to its parent company, US insurance firm Liberty Mutual.

eMag Solutions, an Atlanta-based company specialising in ‘computer forensics’ – gathering data that can be used in lawsuits – is to establish its European HQ in the Welsh capital Cardiff. The company, which has a long association with Wales, will be based at the Cardiff Gate International Business Park and will serve customers in sectors including consultancy, accountancy, insurance and law. Gathering electronic data has become a key part of many legal investigations, and involves cracking codes and encryptions, retrieving files that have been deleted and establishing clear audit trails. Brendan Sullivan, president and chief executive of eMag Solutions, said: “We must have access to the major legal and financial markets in London, as well as access to a highly-skilled and technical workforce where employment loyalty is prevalent. We feel Cardiff can offer us the right blend, and look forward to expansion here.”

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