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Start-ups by sacked workers give a boost to City rentals
25 Aug 2009Temporary office space provider Regus said today that it was witnessing strong signs of a bounceback in the City as financial workers made redundant by big firms set up new entrepreneurial ventures.
Chief executive Mark Dixon said occupancy levels at its 14 serviced offices in the City was running at 90% — way ahead of his expectations — thanks to the new entrepreneurs' need for relatively cheap, flexible office space.
“We thought the City would be much weaker, but it's a dynamic place,” Dixon said. “Many people are bouncing back with their own niche business ideas.”
The huge pool of skilled unemployed financial workers is also tempting foreign companies to start up small operations in the City using Regus's office space.
Dixon said he was now looking at opportunities to expand around the world, particularly in Asia, Eastern Europe and the US.
Dixon hiked the interim dividend 33% to 0.8p a share as a sign of his confidence despite operating profits for the six months to 30 June being down 8% at £74.4 million.
Reader views (1)
It is interesting to note that senior finance professionals are leaving big banks to set up smaller ventures. A potentially interesting follow-on question is whether the shift in size also leads to changes in operational structure.
Having left a bulge bracket bank to set up an M&A boutique 6 months ago, I have come across a number of firms that make it easier to get set up (albeit at a more sophisticated level than Regus).
One example is Craton Partners. The company provides outsourced analysis (using former bulge-bracket professionals) to investment banking boutiques and smaller private equity firms. Among other things, this significantly facilitates the process of setting up a small boutique, allowing principals to focus on relationships and high-level advice (rather than the cycle of recruitment, training and retention of analysts).
Perhaps the trend of bulge-bracket-to-boutique has implications for more than where people rent their office space. It seems logical that smaller firms, often with volatile deal flow, would seek to minimise their exposure to fluctuations in revenue generation (from which some will have been shielded during their time at large corporations). Surely the centralisation of many of the functions typically performed in-house by large investment banks is a feature of the evolving financial services industry?
- Michael Arnold, London, UK, 25/08/2009 14:01
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