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Survey reveals limited impact of Brexit on European private equity

The ongoing Brexit negotiations are not having a significant impact on fundraising and investment for UK and European managers, according to the latest annual industry survey from private equity and real estate fund administrator Augentius.

The survey of over 100 managers and investors from across the globe provides an annual snapshot of industry sentiment, and can be downloaded in full here.
 
This year’s findings paint a broadly positive picture of the past year, with a majority of managers across all regions reporting an improvement in market conditions during 2017, exceeding expectations at the start of the year. However, looking ahead to 2018, the picture starts to diverge – whilst managers in the US and Asia are optimistic that conditions will improve further, two-thirds of UK and European managers predict conditions will remain the same.
 
A similar regional split is seen in managers’ views on what they found most challenging over the past year. While US and Asian managers were primarily focused on fundraising and finding investment opportunities, UK and European managers by contrast identified market and tax regulation as their two biggest headaches.
 
On the investor side, sentiment is more conservative. When asked how they would compare the sector in 2017 to the previous year from an investment point of view, a majority felt it had either stayed the same or become less attractive.
 
Ian Kelly (pictured), Group CEO of Augentius, says: “Despite all the political dislocations of the past two years, our annual surveys have tracked a steady improvement in sentiment among private equity and real estate managers across the globe. While it’s good to see this trend continuing in the US and Asia, the feeling among UK and European managers is slightly more subdued.
 
“More worrying is the contrast in outlook and predictions for the sector between managers and investors, suggesting a nagging disconnect between the two and highlighting the importance of good LP/GP communication.”
 
While negotiations have so far yielded little clarity on how, if at all, Brexit will affect the European private equity and real estate landscape, the impact on the industry seems muted with around half of managers having seen no real effect and very few investors reporting an adverse effect on their view of Britain as a destination for capital. A small number of managers did report some impact on fundraising and investment attributed to the Brexit process.
 
Kelly adds: “The fact that a significant portion haven’t yet seen any effect and investors seem unperturbed suggests that the general lack of detail is causing many to take a ‘wait and see’ attitude before making any big decisions.”

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