Five ‘thriving’ UK tech firms worth backing
Investors must not ignore home-grown digital companies, says James Connington
Britain may not yet have a Google, Amazon or Facebook, but investors would be wrong to dismiss domestic technology stocks. There are a host of promising smaller firms. Many operate in niche sectors that do not attract the same attention as the internet giants, but they still show significant potential.
Dan Nickols, manager of the £1.3bn Old Mutual UK Smaller Companies Fund, said: “We have a thriving tech sector in this country, which those prepared to invest in smaller firms can capitalise upon.
“Our winners are winners in niches, rather than global titans, but there are a range of companies starting to dominate their sectors.”
Here are five British tech companies that top fund managers are backing. Market value £920m; turnover £24.5m; pre-tax loss £9.5m Blue Prism’s share price has soared by more than 1,000pc since it floated in 2016. Mr Nickols said it is “arguably the global number one at what it does” and “one of the most potent examples of a business that can get to a genuinely large scale”.
The company makes “software robots”, which enable firms to move data between operating systems, replacing human staff.
“The market is potentially very large, and Blue Prism has – quite cleverly – used the big four global professional services firms to sell its services on its behalf,” said Mr Nickols.
He added that the business is still in the phase where it is investing for growth, meaning it does not yet make a profit, but has the ability to exceed market forecasts. Market value £780m; turnover £87.5m; pre-tax profit £12m GB Group is an “identity data” specialist that allows businesses to tie online clients to their real identities.
“Online gambling companies, for instance, are highly regulated and need to ensure customers are 18,” explained Mr Nickols. He said that GB Group believes it can establish the identity of around half the world’s population – “a powerful offering”.
“It’s already a global business, and is growing at 10pc to 20pc a year. It’s not in its infancy, but is by no means mature,” he said. “Management has demonstrated a range of ways they can add to its capabilities and grow by buying other firms.” Market value £560m; turnover £133m; pre-tax profit £7.2m Accesso is a software company that provides digital tools for theme parks, museums and other attractions to manage ride demand, cut waiting times and boost visitor spending.
It is a top 10 holding of the Rathbone UK Opportunities fund, run by Alexandra Jackson. “Accesso sells its software to seven of the 10 top global theme park operators,” she said. “Less time spent queuing means customers dotDigital produces tools for online marketers. Its main product enables the automation of marketing emails, allowing businesses to build and manage campaigns more efficiently, including tailoring emails to the recipients’ preferences and lifestyle.
“This is a level of personalisation that consumers are coming to expect and demand,” said Mr Tonge.
He said the firm has intellectual property in its software, recurring revenues as it sells its services for a monthly charge, and a strong distribution network.
“In late 2017 it acquired messaging specialist Comapi, which is supporting its push to deliver its services via mobile, Facebook messenger and more,” he added.
‘The firms are not global titans but are starting to dominate their sectors’