Where to uncover the hidden gems in the UK tech sector
UK companies are embracing technological innovation, creating a diverse range of opportunities for investors.
Whether giant corporation or individual consumer, technology’s integration with our lives has only been accelerated by the pandemic. The UK is sometimes perceived to be lacking in tech companies but in fact we see an exciting range of opportunities in both public and private equity markets.
Tech to benefit both physical and financial health
For several years the healthcare sector has adopted technology across different patient care settings, and the need for this has been made abundantly clear by the global pandemic.
For example Cera is a technology-enabled private healthcare company which has grown rapidly to become one of the largest home care providers in the UK. The company has pioneered digital services, data analytics technologies and artificial intelligence to improve elderly care, while empowering users to live longer and healthier lives at home.
In a post-pandemic world we think there will be a continued adoption of remote monitoring technologies within the healthcare sector and an increased use of technology to reduce the burden on hospitals.
Fintech companies have supported financial inclusion, democratised wealth management, and increased the utilisation of payment services. Rapyd is an example which falls into the latter area; in 2020 it saw a massive acceleration in the adoption of local and cross-border digital payments, which continues to fuel its significant global growth.
The firm offers one of the fastest ways to power local payments anywhere in the world, enabling companies across the globe to access markets quicker than ever before. We believe it is well placed to continue growing internationally as it invests in its engineering and products teams, scales in its existing markets and looks to expand into new territories whilst also considering M&A opportunities.
Innovative tech in learning and leisure
The global video games sector has seen 3D graphics and special effects gain in popularity as consumers seek out a more realistic user experience. Pandemic-driven lockdown measures saw a rise in demand for entertainment services such as video games, and several public companies in the sector saw their share prices rise substantially.
While still a niche area of the UK small and mid cap market, the video games sector saw a new entrant earlier this year with the initial public offer of Tinybuild, a developer and publisher of video games which uses 3D technology within its content.
Meanwhile, the learning & development industry is increasingly turning to internet-based learning. Today, formal and informal education is widely accessible to the public online, while many companies have also adopted electronic training tools within their organisations, targeted at professional and skills development.
Learning Curve Group provides life-changing opportunities for over 160,000 learners and 4,500 employers per year to help upskill both new and existing staff, enabling individuals to develop new skills in order to enter employment or advance their careers. It does this in several different formats, including online, which it was able to scale up during the depths of the pandemic.
And finally, the days of trying to catch a bartender’s eye may be over as pubs and other consumer businesses use technology to improve operational efficiency via queue and order management.
As an example, publicly listed City Pub Group (an operator of premium pubs in the UK), recently introduced its ‘City Club App’ to allow customers to pre-order before even reaching the venue. Separately, the onset of Covid-19 led the company to adopt a 100% cashless payment system across its estate, due to concerns about the risk of virus cross-contamination via the direct handling of cash.
Combined with various other cost-cutting measures, as well as its opportunity to gain share from smaller competitors that have not survived the pandemic, we think it could emerge stronger from the pandemic.
We believe that as companies continue to adopt and keep up with the ever-evolving technological landscape, this should increase their competitiveness and efficiency, consequently compounding growth and driving profitability.
A version of this article appeared in Investment Week on 7 July.