A serial entrepreneur and technology strategist, and a business innovation strategist have launched a new venture that will work with corporates and private equity firms to leverage Internet of Things (IoT) technology to boost value creation.
Mark Crosier and Marta Szluinska have founded nVoyage in London, UK. It will help corporates and private equity firms leverage the IoT to transform traditional businesses or design and build new ones to order – boosting value creation and returns in the process. The company will target corporates and funds in both the US and Europe.
Corporates have long struggled with internal organic development, particularly when they need to make the jump to a new technology or new business model outside of their direct experience. The alternative of acquiring traditional start-ups has also been historically fraught with risks and lost value, even for the most innovative of acquirers.
The firm’s founders previously helped several large corporates innovate. Last year they successfully completed a commission to design two very large ‘unicorn’ sized start-ups for a large $5bn US client allowing them to test their new Discover, Design and Build process at scale.
The founders believe that a similar approach, which they call Technology Transformation, can also help PE firms realise far higher exit multiples than the industry typically has enjoyed and, in the process, find new investment candidates too – potentially boosting returns from a 2.75x industry average to as high as 4x or 5x in the process.
As well as advising many of the largest US and European corporates, Crosier previously founded DeepStream Technologies, an Internet of Things and 3D electronics hardware firm where he was founder and CEO from 2003 until 2009. He has also held a number of senior engineering management positions at Lee Panavision and Eaton Electric where he served both as an R&D director and later general manager of a new business unit.
Szluinska, who began her career as a research physicist, was responsible for the development and implementation of the technology strategy for BAE Systems Applied Intelligence. She was also instrumental in the development of the UK Technology Strategy for Intelligent Mobility led by the Transport Systems Catapult. The strategy sets out how the UK can be at the forefront of the fast-growing global Intelligent Mobility market, estimated to be worth £900bn by 2025.
Crosier said: “We are hugely excited about this new venture. The corporate and private equity sectors are struggling on many fronts at the moment; it is tough to find suitable acquisition targets and achieve sustained value growth. We see our unique process and technology as solving many of these issues. We want to help our clients leverage the increasingly sophisticated Internet of Things to transform traditional businesses and design and build new ones.
“For corporates, commissioning the design and build of their own start-up at arms-length outside the corporate structure can enable them to harness the entrepreneurial skills, speed and innovation of start-ups, whilst creating a company that can better survive acquisition and integration into a larger entity.
“Meanwhile, the private sector has struggled to find new sources of value growth in a market with an oversupply of capital (dry powder), an increasing dearth of primary acquisition candidates, increasing acquisition costs and lowering exit multiples.
“Our Technology Transformation process solves many of these problems by applying new technology to existing companies, dramatically increasing their exit multiples and thereby making previously unattractive assets into a wealth of new targets for PE firms.
“This is not easy to achieve. The processes we have developed for Discover, Design and Build and Technology Transformation, take a different more rigorous approach than what we’ve seen in the start-up and corporate sectors before. We apply scientific and engineering rigour to the design and build of companies or to their re-design and restructuring, treating the whole company as though it was a product.
“We believe that Technology Transformation of traditional sectors and companies will become the third wave of innovation for the PE sector.”
Szluinska said: “We found the idea of designing and building companies to order for our clients so exciting we just had to make our process available to a wider audience, hence we started nVoyage.
“Our process aims to find the acquirer/sponsor before the company is designed and built. In effect, we are short-circuiting the normal open-loop market process of the start-up sector and in exchange for the certainty of capital supply we provide the entrepreneur with a fair market valuation based on agreed multiples.”
Sunak gives British economy a boost to see out COVID crisis, tax rises ahead
By David Milliken, William Schomberg and Andy Bruce
LONDON (Reuters) – Finance minister Rishi Sunak gave more aid to Britain’s economy and offered companies a big incentive to start investing again, but also announced a future tax squeeze on people and businesses as he began to focus on the COVID-19 hit to the public finances.
Sunak said in an annual budget speech on Wednesday that the economy will return to its pre-pandemic size in mid-2022, six months earlier than previously forecast, helped by Europe’s fastest coronavirus vaccination programme.
But it will be 3% smaller in five years’ time than it would have been without the health shock and extra support was needed as the country gradually lifts restrictions over the next few months, he said.
Sunak’s early warning that he will demand more money from companies and individual taxpayers in the coming years makes him one of the first policymakers from rich countries to address the state of public finances.
Britain’s first rise in corporation tax since 1974 will see big, profitable companies pay 25% from 2023 compared to 19% now.
But Sunak first offered firms an immediate two-year “super-deduction” tax break in a bid to snap them out of their pandemic deep-freeze and invest to boost short-term growth.
The government’s budget watchdog said the move was more than 10 times more generous than an equivalent incentive in 2009.
Sunak repeated his plan to do “whatever it takes to support the British people and businesses”.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances â€“ and I want to be honest today about our plans to do that,” he told parliament. “And, third, in today’s budget we begin the work of building our future economy.”
Among the support measures were a five-month extension of Britain’s huge jobs rescue plan, wider help for the self-employed and the continuation of an emergency increase in welfare payments.
A business rates exemption for retail, hospitality and leisure businesses will now run until the end of June, by when Prime Minister Boris Johnson hopes to have lifted most COVID-19 restrictions.
An existing tax break for home-buyers was extended by three months until June 30 and then for cheaper homes until the end of September.
Shares in housebuilders gained on the news, with Persimmon one of the top risers in the FTSE 100, up about 5%.
Pub firms JD Wetherspoon and Premier Inn owner Whitbread also rose about 5%, helped by an extended VAT cut for the hospitality sector.
But British government bond prices fell sharply after Sunak said overall borrowing will be much bigger next financial year than thought just a few months ago – 234 billion pounds, or 10.3% of gross domestic product, compared with a previous estimate of 164 billion pounds, or 7.4% of GDP.
The Debt Management Office said it planned to sell 296 billion pounds of gilts in the coming year, well above the 247 billion pounds expected in a Reuters poll.
“The UK’s fiscal stance has become much looser, and more focused on investment, more in line with its U.S. and euro area counterparts,” Morgan Stanley economist Jacob Nell said.
“This shift changes our view of the UK. Near term, we see a stronger and more investment-focused recovery bringing forward the return to pre-COVID-19 levels of output.”
To show he will get a grip on borrowing, Sunak’s future hikes will increase the tax burden to its highest since the 1960s, rising from 34% to 35% of GDP by the mid-2020s.
“The UK is thus to become the first major economy to consider such measures,” Valentin Marinov, head of G10 foreign exchange research at Credit Agricole, said.
Britain has suffered the biggest COVID-19 death toll in Europe and its economy shrank by 10% last year, its worst slump in three centuries.
Many companies are also under strain from Brexit after Britain left the European Union’s single market on Jan. 1, and the government faces the challenge of huge investment to meet its promise to create a net zero carbon economy by 2050.
UK EARLY MOVER ON TAX HIKES
Britain’s Office for Budgetary Responsibility (OBR) said the economy was likely to grow 4% in 2021, slower than the 5.5% it had forecast in November, due largely to the current lockdown which began in January.
But the OBR raised its forecast for growth in 2022 to 7.3% from 6.6%.
Sunak has already racked up Britain’s highest borrowing since World War Two, with the deficit reaching an estimated 17% of GDP in the 2020/21 financial year that ends in April and set to fall to a still historically high 10.3% in 2021/22.
Announcing the corporation tax rise, he said: “Even after this change the UK will still have the lowest corporation tax rate in the G7 â€“ lower than the United States, Canada, Italy, Japan, Germany and France.”
Rain Newton Smith, chief economist at the Confederation of British Industry, said the hike was “a huge jump” and that other G7 countries would be more competitive than Britain when state and federal level tax breaks were taken into account.
Businesses with profits of 50,000 pounds or less would pay a new Small Profits Rate at the current rate of 19%.
Sunak also said he would freeze the amount of money that people can earn tax-free and the threshold for the higher rate of income tax at the 2021/22 level until April 2026.
($1 = 0.7156 pounds)
(Additional reporting by Guy Faulconbridge, William James, Costas Pitas, James Davey, Estelle Shirbon, Elizabeth Piper, Paul Sandle, Alastair Smout and Sarah Young; Writing by William Schomberg; Editing by Catherine Evans)
UK’s Sunak extends COVID rescue plan but companies to pay more tax from 2023
By David Milliken and William Schomberg
LONDON (Reuters) – Finance minister Rishi Sunak announced a costly extension of his emergency aid programmes to see Britain’s economy through its current coronavirus lockdown, but announced a tax hike for many businesses as he began to focus on fixing the public finances.
Delivering an annual budget speech on Wednesday, Sunak said the economy will regain its pre-pandemic size in the middle of 2022, six months earlier than previously forecast, helped by Europe’s fastest COVID-19 vaccination programme.
But it will remain 3% smaller in five years’ time than it would have been without the damage wrought by the coronavirus crisis and extra support is needed now as the country remains under coronavirus restrictions, he said.
Among the new support measures was a five-month extension of his huge jobs rescue plan and more help for the self-employed, the continuation of an emergency increase in welfare payments, and an extension of a VAT cut for the hospitality sector.
A tax cut for home-buyers was also extended until the end of June.
“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis,” Sunak told parliament.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And, third, in today’s Budget we begin the work of building our future economy.”
Announcing forecasts by the Office for Budgetary Responsibility (OBR), Sunak said the economy was likely to grow by 4% in 2021, slower than a forecast of 5.5% made in November, reflecting the current lockdown which began in January.
Looking further ahead, the OBR forecast gross domestic product would grow 7.3%, 1.7% and 1.6% in 2022, 2023 and 2024 respectively. In November, the OBR had forecast growth in those years of 6.6%, 2.3% and 1.7%.
Sunak promised to do “whatever it takes” to steer the economy through what he hopes will be the final months of pandemic restrictions.
He has already racked up Britain’s highest borrowing since World War Two, which hit an estimated 17% of GDP in the 2020/21 financial year that is about to end and should fall to a still historically high 10.3% in 2021/22.
In a first move to raise taxes, Sunak announced he would raise corporation tax to 25% from 19% from 2023, by which time the economy should be past the pandemic crisis.
“Even after this change the UK will still have the lowest corporation tax rate in the G7 – lower than the United States, Canada, Italy, Japan, Germany and France,” he said.
Businesses with profits of 50,000 pounds or less would pay a new Small Profits Rate, maintained at the current rate of 19%.
Sunak also said he would freeze the amount of money that people can earn tax-free and the threshold for the higher rate of income tax until 2026.
(Writing by William Schomberg; Editing by Catherine Evans)
Renewable diesel boom highlights challenges in clean-energy transition
By Rod Nickel, Stephanie Kelly and Karl Plume
(Reuters) – For 17 years, trucker Colin Birch has been hitting the highways to collect used cooking oil from restaurants.
He works for Vancouver-based renderer West Coast Reduction Ltd, which processes the grease into a material to make renewable diesel, a clean-burning road fuel. That job has recently gotten much harder. Birch is caught between soaring demand for the fuel – driven by U.S. and Canadian government incentives – and scarce cooking oil supplies, because fewer people are eating out during the coronavirus pandemic.
“I just have to hustle more,” said Birch, who now sometimes travels twice as far across British Columbia to collect half as much grease as he once did.
His search is a microcosm of the challenges facing the renewable diesel industry, a niche corner of global road fuel production that refiners and others are betting on for growth in a lower-carbon world. Their main problem: a shortage of the ingredients needed to accelerate production of the fuel.
Unlike other green fuels such as biodiesel, renewable diesel can power conventional auto engines without being blended with diesel derived from crude oil, making it attractive for refiners aiming to produce low-pollution options. Refiners can produce renewable diesel from animal fats and plant oils, in addition to used cooking oil.
Production capacity is expected to nearly quintuple to about 2.65 billion gallons (63 million barrels) over the next three years, investment bank Goldman Sachs said in an October report.
Rising demand is creating both problems and opportunities across an emerging supply chain for the fuel, one small example of how the larger transition to green fuels is upending the energy economy. A renewable diesel boom could also have a profound impact on the agricultural sector by swelling demand for oilseeds like soybeans and canola that compete with other crops for finite planting area, and by driving up food prices.
Local and federal governments in the United States and Canada have created a mix of regulations, taxes or credits to stimulate more production of cleaner fuels. President Joe Biden has promised to move the United States toward net-zero emissions, and Canada’s Clean Fuel Standard requires lower carbon intensity starting in late 2022. California currently has a low-carbon standard that provides tradable credits to clean fuel producers.
But the feedstock supply squeeze is constraining the industry’s ability to comply with those efforts.
‘SPINNING FAT INTO GOLD’
Demand and prices for feedstocks from soybean oil to grease and animal fat is soaring. Used cooking oil is worth 51 cents per pound, up about half from last year’s price, according to pricing service The Jacobsen.
Tallow, made from cattle or sheep fat, sells for 47 cents per pound in Chicago, up more than 30% from a year ago. That’s boosting the fortunes of renderers such as Texas-based Darling Ingredients Inc and meat packers such as Tyson Foods Inc. Darling shares have about doubled in the last six months.
“They’re spinning fat into gold,” said Lonnie James, owner of South Carolina fats and oil brokerage Gersony-Strauss. “The appetite for it is amazing.”
Clean fuels could be a boon for North American refiners, among the pandemic’s hardest-hit businesses as grounded airlines and lockdowns hammered fuel demand. Refiners Valero Energy Corp, PBF Energy Inc and Marathon Petroleum Corp all lost billions in 2020.
Valero’s renewable diesel segment, however, posted a profit, and the company has announced plans to expand output. Marathon is seeking permits to convert a California refinery to produce renewable fuels, while PBF is considering a renewable diesel project at a Louisiana refinery.
The companies are among at least eight North American refineries that have announced plans to produce renewable fuels, including Phillips 66, which is reconfiguring a California refinery to produce 800 million gallons of green fuels annually.
Once new renewable diesel production capacity comes online, feedstocks are likely to become more scarce, said Todd Becker, chief executive of Green Plains Inc, a biorefining company that helps produce feedstocks.
Goldman Sachs estimates that an additional 1 billion gallons of total capacity could be added if not for issues with feedstock availability, permitting and financing.
“Everybody in North America and around the world are all trying to buy low carbon-intensity feedstocks,” said Barry Glotman, chief executive of West Coast Reduction.
His customers include the world’s biggest renewable diesel maker, Finland’s Neste. A spokesperson for Neste said the company sees more than enough feedstock supply to meet current demand and that development of new feedstocks can ensure supply in the future.
SOYBEAN, CANOLA BOOM
Renewable diesel producers are increasingly counting on soybean and canola oil to run new plants.
The U.S. Agriculture Department (USDA) is forecasting record-high soybean demand from domestic processors and exporters this season, largely because of soaring global demand for livestock and poultry feed.
Crushers who produce oil from the crops are also scouring Western Canada for canola, helping to drive prices in February to a record futures high of C$852.10 per tonne. Soybeans reached $14.45 per bushel in the United States last week, the highest level in more than six years.
Rising food prices are a concern if the predicted demand for crops to generate renewable diesel materializes, said USDA Chief Economist Seth Meyer. U.S. renewable diesel production could generate an extra 500 million pounds of demand for soyoil this year, Juan Luciano, chief executive of agricultural commodities trader Archer Daniels Midland Co, said in January. That would represent a 2% year-over-year increase in total consumption.
Greg Heckman, CEO of agribusiness giant Bunge Ltd, in February called the renewable diesel expansion a long-term “structural shift” in demand for edible oils that will further tighten global supplies this year.
By 2023, U.S. soybean oil demand could outstrip U.S. production by up to 8 billion pounds annually if half the proposed new renewable diesel capacity is constructed, according to BMO Capital Markets.
That same year, Canadian refiners and importers will face their first full year complying with new standards to lower the carbon intensity of fuel, accelerating demand for renewable diesel feedstocks, said Ian Thomson, president of industry group Advanced Biofuels Canada.
Manitoba canola grower Clayton Harder said it is hard to envision a vast expansion of canola plantings because farmers need to rotate crops to keep soils healthy. Farmers may instead have to raise yields by improving agronomic practices and sowing better seed varieties, he said.
British Columbia refiner Parkland Corp is hedging its bets on feedstock supplies. The company is securing canola oil through long-term contracts, but also exploring how to use forestry waste such as branches and foliage, said Senior Vice President Ryan Krogmeier.
The competition to find new and sustainable biofuel feedstocks will be fierce, said Randall Stuewe, chief executive at Darling, the largest renderer and collector of waste oils.
“If there is a feedstock war, so be it,” he said.
(Reporting by Rod Nickel in Winnipeg, Stephanie Kelly in New York and Karl Plume in Chicago; editing by David Gaffen, Simon Webb and Brian Thevenot)
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