Brexit will have an effect on both the European and UK private equity and real estate landscapes, but it is only a number of issues facing managers, says David Bailey, Director of Marketing and Communications at private equity fund administrator Augentius.
Bailey points out that the European industry is in flux more generally, with ESMA due to report shortly on the extension of “passporting” to a number of third party countries, which itself could transform the way in which non-EU managers are able to access European investors.
“Two other things should be borne in mind,” says Bailey. “Firstly, with an absolute minimum of two years for exit negotiations (others suggest four to six years as a more likely timeframe), the very earliest point at we will see a change in the UK’s status is in the summer of 2018. Secondly, the reality is that EU domiciled investors are keen to invest in Private Equity and Real Estate managers the world over, diversifying their portfolios in terms of both geography and asset classes. While UK managers going forward may need to create slightly more complex multi-jurisdictional structures to accommodate the change, the fundamentals will remain in place.
“So it is important not to overstate the impact this Brexit will have on the industry, here and elsewhere. What is true is that, given the more complex environment this will create, it is even more important than ever that managers look to multi-jurisdictional providers, who are able to offer a range of solutions across multiple domiciles in a financially efficient manner. The costs of not doing so will continue to rise.”
