A boom in private capital could aid the catering sector as the industry bounces back post-pandemic, it has been suggested.
A new report from Globacap has revealed that, despite the pandemic and volatile economic conditions, catering businesses have still been raising private capital and many firms have chosen to raise money privately rather than seeking IPOs.
More than 10% of catering firms said they actually raised more money than expected during the pandemic, while 87% have chosen to stay private due to the pandemic.
Overall, British firms raised over half a trillion pounds last year outside of public and stock markets.
Globacap said that mid-cap and large businesses in the UK raised £615 billion in the year to February 2021.
The majority of CFOs questioned said the pandemic had changed their financing plans, however two-thirds (67%) said they raised as much or more than expected.
This wave of fundraising is expected to accelerate as companies utilise new technology designed to help them access private capital.
Despite a string of high-profile IPOs in the UK, including Deliveroo, the findings also suggest that the vast majority of senior executives (88%) would prefer to keep their company in private hands for as long as possible.
However, those finance leaders that do want to maintain control by remaining private can find themselves being stymied by process.
Over a third (38%) of CFOs said that admin is their biggest private fundraising pain point and a further quarter (26%) said regulatory complexities make the process impossible without advisors.
These issues highlight the blockages that exist within the current private fundraising pipeline and suggest the benefits that effective use of technology could bring to CFOs and finance leaders trying to remain private for longer.
88% of those opting to remain private prefer to avoid private equity rounds if possible, due to the oversight and restrictions they bring.
However, private equity is often the only viable option, as shorter-term investors require a route to liquidity such as an IPO.
For most (81%), the pandemic has changed how they raise capital. More than half (59%) sought venture capital or private equity with only a fifth (22%) opting to go public and list on the LSE or Alternative Investment Market (AIM).
Alexander Green, co-founder and chief evangelist at Globacap, said: “We’re seeing evidence of a healthy private market. Investment is continuing, so we expect to see a positive bounce-back for businesses following the health crisis.
“This, coupled with the news that the UK economy is set to grow at the fastest rate in more than 70 years, is encouraging for private businesses.”
“What’s more, we know that technology is now pushing out the line at which businesses have to go public, by removing the administrative burden created by an outdated process. This empowers companies to stay private for much longer while still accessing large capital for continued growth.”