Brexit and PE

Boris Johnson's landslide victory in the UK election practically assures Brexit will become a reality. What does this bode for European private equity?

Happy Friday!

Hope your week went well! It was a busy one here. Last night was the holiday party so it’s a blurry morning for yours truly.

Big news this morning is Boris Johnson’s huge UK election victory, which all but ensures the country will be out of the European Union. Brexit has made the UK less popular with LPs among European countries, where it ranks fourth among European respondent interest behind the Netherlands, according to Probitas Partners’s annual LP survey.

However, LPs in the survey had some interesting thoughts: “The current dislocation of [the] UK is a great opportunity to increase our exposure,” said a US fund of funds.

Private equity investors don’t believe Brexit will create new opportunities for private equity, except perhaps distressed plays to buy assets cheaply, according to a 2018 survey from Coller Capital.

One in 20 LPs said Brexit will have a positive impact on European private equity generally, while two in five said it would be harmful, according to the survey.

Meanwhile, some GPs and LPs were deferring decisions on capital-raising and investment activity in the UK until the Brexit issue resolved, wrote Carmela Mendoza, reporter with PEI, back in September. Challenges cited at the time included managers’ ability to attract capital into the country at a time of uncertainty, as well as attracting and retaining talent, Mendoza wrote.

“Brexit will be bad for our industry,” Colm O’Sullivan, a partner at PAI Partners, said at an industry conference at the time. “The short-term volatility is going to be enormous – the consequences in British politics will be chaotic and no one knows if there will be a government in six weeks’ or six months’ time, or in a few years.” Read more.

With a potential resolution finally on the horizon, perhaps some of the uncertainty will be out of the equation. So what does that mean for private equity? Reach me with your thoughts.

Distressed: Speaking of uncertainty, Probitas Partners in its annual LP survey found that, despite a perception among many investors that the market is peaking, interest in distressed debt and special situations funds declined. Interest in distressed debt fell from 30 percent in 2007 to 12 percent in 2019, the survey found.

Top Scoops

Siguler Guff hired Michael Apfel, a founding member of MidOcean Credit Partners, in the newly created role of head of credit. At MidOcean, Apfel was a senior portfolio manager and head of opportunistic credit strategies, as well as CIO. Read our news brief here.

Curium Pharma, the CapVest Partners-backed nuclear medicine imaging company, is poised to field first round bids early next week, writes Sarah Pringle. The process formally kicked off in late November, with several PE groups expressing interest, she writes. Check out the particulars here.

That’s it! Have a great rest of your day. Hit me up as always with tips n’ gossip, feedback or just to chat at, on Twitter or find me on LinkedIn.