Updates

Cyber specialist joins faculty

Mitigo, a specialist adviser on cyber security risk, is the latest firm to join the Corporate Finance Faculty. Headquartered near Manchester, the company primarily advises businesses on cyber security risk management, helping them understand risks that exist within their organisation and putting in place necessary precautions. Its reviews cover IT, technology and cyber security posture, as well as people and business processes. Mitigo also carries out reviews of legal and regulatory compliance in relation to the security of personal data and include risk assessments required by law.

“We give senior management and other executive and non-executive directors the independent assurance they need in respect of their cyber security and operational resilience. That includes penetration testing, but it is so much more than that,” says Kerrie Machin, partner and head of business development at Mitigo Group. “We find a lot of professional and financial services businesses we work with have room for improvement around cyber security. So we work with them to establish a stronger regime of governance and a security framework around their business. The key thing is that they can prove and demonstrate, to clients, to themselves and to regulators, that they are doing the things they should be doing. A lot of businesses struggle to do that without help, direction and independent assurance.”

Mitigo employs 35 people and its clients are primarily in the UK, but also in continental Europe and elsewhere, and are corporates or private equity-backed businesses and SMEs in the £1m-plus revenue range. As well as partnering with ICAEW, Mitigo is also working with the Law Society of England and Wales, Law Society of Scotland, ICAS and the Bar Council.

The firm has typically been doing assessments and subscribed-for ongoing contract work and is now going to market with a due diligence offering. “We expect to do more due diligence and M&A-related work. We have very experienced people in-house and have definitely got the skill set for that,” adds Machin.

“We are seeing a lot more interest in our services for several reasons. There are more cyber attacks publicised, so people and businesses are more aware of the threats. People are recognising that cyber security is not an just an IT thing. Too many have had their fingers burned by leaving it to generalists.”

BOE private equity review

The Bank of England’s Prudential Regulatory Authority (PRA) has published the findings of its ‘Thematic review of private equity-related financing activities’.

In a covering letter to the findings of its review, the PRA noted: “Assets under management within the PE sector have grown from around $2tn to $8tn over the last decade. Banks’ financing activities related to the sector have also expanded over this period. Most recently, we have seen an increase in exposures to various ‘non-traditional’ forms of financing linked to financial sponsors and the PE fund sector in general, such as net asset value-based loans secured against PE fund assets and facilities backed by limited partner interests. This emerging trend in newer forms of financing has taken place alongside notable structural changes within markets that support banks’ existing and longstanding base of PE-related financing businesses. These structural changes include the growth of private credit markets and a degree of consolidation in banks that provide subscription financing credit facilities to PE funds globally.”

In an annex to the letter, the PRA sets out its main findings and expectations around risk management in light of the risks identified by the review.

“Given the scale, breadth, complexity, and interconnectedness of multiple forms of PE-linked credit and counterparty exposures typically entered into by banks, it is important that firms place a high priority on any necessary improvements to their risk management approach in this area,” the PRA letter added.

Faculty representation

Takeover Code consultation

The Takeover Panel is proposing to reduce the number of companies subject to the Takeover Code in its new consultation – PCP2024/1: Companies to which the Takeover Code applies.

The new proposals would see certain UK-registered companies no longer subject to the Code, including:

• public or private companies that were UK-listed more than three years prior to the relevant date;
• public or private companies whose securities are, or were previously, traded solely on an overseas market;
• public or private companies whose securities are, or were previously, traded using a ‘matched bargain facility’;
• any other ‘unlisted’ public company; and
• private companies that filed a prospectus at any time during the 10 years prior to the relevant date, (unless they were UK-listed at any time during the three years prior to the relevant date).

Also, the ‘residency test’, requiring certain companies to have central management and control in the UK to be subject to the Code, would be abolished. Companies currently ‘in scope’ will have a three-year transition period from the implementation date of the changes.

The expiry date for the consultation is 31 July 2024. The Corporate Finance Faculty will be submitting a coordinated response on behalf of ICAEW and faculty members. If anyone would like their comments included in that response they should email Katerina Joannou, by 28 June 2024. We invite members’ comments and observations to help inform our response.

Dates for the diary

Faculty AGM

The Corporate Finance Faculty’s annual general meeting will be held at Chartered Accountants’ Hall on 20 June. The meeting starts at 12:30 with lunch, followed by a review of the faculty’s work over the past year by faculty chairman Alistair Brew and a look at what’s coming up in the next 12 months by ICAEW head of corporate finance, David Petrie. Members can book here.

Leeds seminar postponed 

The Corporate Finance Faculty and the UK Infrastructure Bank’s ‘Solving the UK’s infrastructure investment challenge’ at the Marriot hotel in Leeds has been postponed from the morning of 19 June to a date in November to be confirmed, due to the UK general election purdah rules. Speaker and booking details will be published once the date of the November event is finalised.

2024 Annual reception 

A date has been set for the Corporate Finance Faculty’s Annual Reception: Wednesday November 13, at Fishmongers’ Hall. The most popular member networking event in the faculty, it is free to members. As always, it will feature a high-calibre keynote speaker, presentations of the Corporate Finance Faculty’s much-coveted Corporate Development Award and of the prizes for the best performing students in the ICAEW/CISI Corporate Finance Diploma. There will be a champagne reception and the chance to network after the speeches and presentations.

A booking page will be set up on the ICAEW website in due course. Early booking is advised.