There are plenty of investor funds seeking good companies

‘Gaining confidence and building a relationship with investors is more difficult’ says Philip White, Chief Financial Officer of Diaceutics PLC.

4th November, 2020
There are plenty of investor funds seeking good companies

What's your name and what position do you hold?

Philip White, Chief Financial Officer of Diaceutics PLC.

What are your day to day responsibilities?

From a strategic perspective, I provide leadership, direction and management as part of the company’s executive committee and to support our overall aim of enabling better testing which helps patients get to the right treatment at the right time.

In particular, I oversee the finance team within Diaceutics and develop our long-term business plans. As part of this, I manage and control our global corporate group structure consisting of 140 full-time equivalents/team members across 19 countries.

In terms of the day-to-day tasks, I manage our key performance indicators - financial reporting, budgeting and forecasting. This also involves reporting to the board on a regular basis and at sub-committee meetings. Furthermore, I am responsible for building and developing relationships with external partners and stakeholders, including the negotiation of key contracts.

What is your professional background?

I have more than 15 years of financial and management experience as a CFO. Having been responsible for the financial and risk management of Diaceutics, I have extensive expertise in business planning, investment resource prioritisation, financial reporting and analysis.

During my time with Diaceutics, I have been involved in growing the organisation, seeing it listed on the AIM market of the London Stock Exchange and developing a best-in-class finance strategy for the business.

How do you see the current situation affecting capital fundraising for businesses?

In relation to the public markets, we have seen a major shift in the way investors interact. It is now possible to go public or complete a secondary financing raise without physically meeting investors. For example, we completed a £20M raise in May 2020 all via Zoom and Teams. In a way, this capability can level the playing field for Irish companies and make such opportunities slightly more accessible with travel being out of the question at the current time.

As a result, it has become a well-established practice for IPOs to take place digitally and without any face-to-face meetings. The reality is there are plenty of investor funds seeking good companies and given the level of returns in other asset classes, this will continue. Businesses really shouldn’t be affected by travel limitations, nor allow geopolitical events to distract them. If the time feels right to make the move, why wait?

When might the IPO market recover?

The IPO market is in what I would describe as a steady state. There is a trend for a greater number of small to mid-sized companies remaining private. This could speak to the lack of understanding of what it means to IPO and the regulatory burden. Also, the funding landscape for private equity has improved substantially over recent years. That said, we have now seen 23 companies go public in London during 2020, with 18 of those since the onset of COVID-19 restrictions. While this number is still a little bit off prior years, it is moving in the right direction. Over £7bn of capital has been deployed to IPOs so far this year and there is a strong, ongoing flow of companies in the IPO pipeline, so there are positive and promising signs for the future.

What are some of the new challenges growth-stage businesses encounter when they are on the lookout for new investors?

There are three key challenges in these COVID-19 times in relation to attracting new investors. Firstly, gaining confidence and building a relationship with investors is more difficult as a lot of investors do still like to meet the management team and track the company performance over time before investing. The second challenge concerns financial forecasting – there are a lot of fundamentally good growth businesses that, due to the pandemic, have withdrawn guidance or are finding it difficult to forecast their finances. Lastly, many organisations will be struggling to build and secure the funding to ‘get out of the blocks’ and take advantage of upside within their sector during the current time.

What can the government do to attract private capital investment in firms and make equity financing easier to access?

Governments have the power to not only improve the investment landscape for firms and increase the number of companies within a region, but also attract international investment into the local investment funds – thus making it easier for organisations to attract and secure global funding.

In Northern Ireland, co-funding with investment firms has really benefitted growth companies. This is where the government provides a percentage of the fund and secures the private investors on the downside. Moreover, enhancing the tax regime for individual and corporates to invest within a region could also result in more private investment.

What are the options to raise capital post-Brexit?

The possibilities will be similar to what they are now. It is key for investors to have access to good growth companies in the UK and EU. Based on my conversations with investors in the UK and Ireland, the view is that the capital investment firms have reorganised to allow for capital to be available for opportunities both within the UK and EU.

What’s next for your company?

After launching the world’s first global diagnostic network, DXRX, just last month, Diaceutics will be collaborating with a network of more than 2,500 labs and a portfolio of pharmaceutical clients throughout 2021 and onwards. The aim is to solve real-world testing challenges across the spectrum of cancer diseases to accelerate biomarker test adoption and time to peak therapy prescription from years to months for patients.

We have invested over two years and $30m into developing the DXRX network, which integrates all stakeholders in precision medicine diagnostics on one secure platform, thus enabling more effective collaboration, testing and treatment. Our focus now is to work with our users to fix critical testing challenges in the precision medicine ecosystem and enable more people to get the treatment they deserve. Current collaborations live on the platform are already addressing industry-wide issues such as PD-L1 reimbursement in the US and IVDR regulatory support in the EU.

Philip White is speaking at The Business Post’s Raising Capital Summit on Nov 4 – www.capitalsummit.ie for full details.

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