2023: A Year in Review from the FGI UK Finance Perspective

Written by Jeremy Smith

2023 will shortly come to a close, making it a fitting time to reflect on the past twelve months and the changes that have transpired in our industry. As a solution provider to businesses, lenders, PE (Private Equity), and advisors, the FGI UK team has access to thought leaders across our space, and we would like to thank all these groups for their continued support throughout 2023. Combining our own observations with insights we have gleaned from the market, we are pleased to share thoughts on the year from the FGI Finance UK perspective. 

UK Mid-Market Environment

The standout feature of the year was the unprecedented rise in interest rates, reaching 14-year highs in the UK. This surge had widespread implications across all industries, affecting borrowing costs, investment decisions, and overall economic dynamics. Firms have faced the challenge of adapting to the new cost of capital, prompting a reconsideration of financial strategies. For many businesses, this is the first time in over a decade that management teams have had to cope with such challenges.  

The surge in interest rates contributed to a substantial reduction in deal volume within the mergers and acquisitions (M&A) market. The heightened cost of capital made financing deals more challenging, and this, coupled with the economic uncertainty, has led to a cautious approach from investors and businesses alike. These conditions have resulted in a slowdown of transactional activities, with many stakeholders adopting a wait-and-see attitude.  

The benign restructuring market has compounded challenges for businesses seeking refinancing opportunities. The subdued refinancing landscape was characterized by a scarcity of viable options, limiting the financial flexibility of companies. As a result, organizations had to navigate financial constraints and explore alternative strategies to ensure operational continuity.  

On the lending side, losses in the market over the past year have caused a ripple effect, influencing the decision-making processes of credit committees. The more conservative approaches adopted by these committees are reflective of an industry-wide recalibration of risk tolerance, making it important to navigate this shift in credit perception and employ robust risk management strategies.  

In summary, the UK mid-market environment in 2023 has been characterized by a complex interplay of economic factors, necessitating strategic agility and resilience from businesses, lenders, and sponsors alike. The rise in interest rates, coupled with subdued M&A and refinancing activities, shaped a landscape where adaptability and forward-thinking strategies became imperative for sustained success.  

FGI UK in 2023

FGI UK focused on our commitment to innovation and client-centric solutions as we navigated the challenges of the UK market this year. From offering creative working capital solutions to addressing the drive to digitally enabled risk solutions, FGI does not stand still.  

A highlight of this year for the Finance team was our participation in supporting ADLT’s acquisition of Cree Lighting. This transformative deal involved the provision of a $40 million Asset-Based Lending (ABL) facility and a term loan on Plant and Machinery (P&M). 

The launch of the FGI T.R.U.S.T.™ platform in the UK marked a significant milestone for FGI Technology. This cloud-based platform, combining technology with functionality, offers corporations, brokers, and lenders a streamlined solution for bad debt management and administration. A highlight of the T.R.U.S.T.™ platform’s success was the strategic collaboration with Bibby Financial Services, a leading player in the financial services sector. Bibby Financial Services opted to use T.R.U.S.T.™ over other platforms for bad debt protection management and administration due to its advanced features and the FGI team’s flexible, solutions-oriented approach to partnership. The collaboration validates the platform’s capabilities and demonstrates its ability to support prominent players in the financial services industry.  

FGI UK in 2024

With measured movements in interest rates, the reopening of the M&A markets, and an expected bounce in restructuring and refinancing activities, FGI UK is positioned to capitalize on emerging opportunities as ABL gains greater levels of traction in the UK.

The FGI UK team approaches 2024 with a clear strategy, while remaining vigilant to market dynamics. FGI’s commitment to flexibility, innovation, and client-centric solutions underscores its readiness to address the dynamic landscape that lies ahead.

Finally, it just leaves us to wish you a very happy, healthy and prosperous New Year, and we look forward to working with you in 2024.