YouGov has abandoned plans to form its own hedge fund in partnership with Numis Securities and Four Capital Partners after Numis failed to raise the funds.
The online market research company, which yesterday announced near-tripled revenue for the year to July 31, had intended to use information from its polls for its own financial gain, as well as selling the data to customers.
Numis declined to comment but YouGov said the “prevailing market conditions were not conducive to the launch of this fund” and it would disband the joint venture. “It is not the greatest moment to launch such an idea,” said Nadhim Zahawi, YouGov chief executive. “The opportunity to use primary research to inform trading decisions is very strong for us.”
YouGov said demand for its products from financial services customers remained healthy, with financial institutions leading demand for its pan-European products.
“This is a time when companies like ourselves can gain new [customer] relationships,” said Mr Zahawi, because YouGov is “cheaper and faster but still has accuracy and authority” against traditional research groups.
Revenues in its existing UK and Middle-East businesses rose 38 per cent before acquisitions, but total group revenues almost tripled to £40.4m. Pre-tax profits fell 29 per cent to £4m because of aborted acquisition costs and increased investment in sales and technology infrastructure.
YouGov now has 1.75m panel members in 31 countries, up from 260,000 in 14 countries a year ago. It has high hopes for its US business, its smallest territory with sales of £2.8m, thanks to polling partnerships for the presidential election with CBS, the broadcaster, and The Economist.
YouGov’s shares rose 10½p, or 24 per cent, to 54¼p, reflecting investors’ relief at a steady outlook, even though analysts at Numis cut a further £1m from 2008-09 profit forecasts to £10m, reflecting the need for further investment. YouGov shares have fallen from 107p, when it warned of increased costs in mid-August, leaving its shares valued at 7.6 times Numis’s new earnings forecasts. Yet its margins are ahead of traditional market research groups and it is benefiting from a structural shift to online polling. While the media sector remains out of favour, YouGov’s shares look oversold.
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