Brexit has had limited impact on European private equity market, survey says
20 February 2018 London
Image: Shutterstock
Around half in the industry have seen no real effect of Brexit, and investors indicate no change in their views on the UK as a destination for investment, according to Augentius’ annual global survey.
Augentius, which asked over 100 managers and investors from across the globe, found that because of these views, ongoing Brexit negotiations are not having a “significant impact on fundraising and investment”.
Some 42 percent of European general partners said Brexit would have “no real effect” on global investment compared to 55 percent and 70 percent of Asian and American general partners, respectfully.
In the survey results, it said: “For all the sound and fury Brexit continues to cause in the news, very little is yet known about how it will affect the landscape of the UK and European market, and the extent to which (if any) the UK market will shift in its relationship to the continent [...] suggesting that the general uncertainty is allowing for a ‘wait and see’ attitude before any big decisions are made.”
It added: “However, a minority of investors do report being more conscious of their managers’ strategies in light of possible Brexit outcomes.”
By contrast to UK and European thought, Augentius stated that its answers from the US and Asia were “more bullish” when concerning the market climate.
It explained: “Although the industry overall is feeling positive, on the investor side, sentiment is a little more conservative but nevertheless, they reported no change to their appetite for investing in UK based funds.”
Augentius found that a similar regional split was seen in managers’ views on what they found most challenging over the past year.
It said: “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.”
Augentius stated that Asian and American opinion on the investor side, sentiment seemed more conservative.
When asked how they would compare the sector in 2017 to the previous year from an investment point of view, a majority of Asian and American firms felt it had either stayed the same or become less attractive.
The survey also indicated that investors remain very favourable towards the aspects that third party administrators can add to the process.
Some 88 percent of limited partners said that third-party administrators provide better independant insight and 63 percent of limited partners asked said third-party administrators were good value for money.
Elsewhere, Augentius’ survey indicated that the industry is continuing to significantly increase its spend on cybersecurity to meet growing threats.
A large majority of UK, European and American managers significantly increased their cybersecurity spending during the last year, and when asked said they intended to do the same over the course of 2018.
Augentius warned: “The private equity and real estate industry is increasingly realising that is it a prime target for attacks, and that outdated approaches to infrastructure and security are leaving it uniquely vulnerable.”
Again the private equity and real estate investors found that Asian and American outlook differed to that of UK and European investors. A slight majority of Asian general partners invested less in 2017 than the previous year, and an even larger majority intend to spend less in the year to come.
Though an increase in cyber security was still evident in both continents.
Looking ahead, Augentius concluded: “On a global level the findings paint an upbeat picture of
an industry coming off the back of a better-than-expected 2017, and looking forward to another year of opportunity.”
“However, it also highlights a number of potential headwinds and challenges, both immediate and on the horizon, that firms could do well to be wary of.”
“In Europe especially, firms need to ensure they are effectively navigating regulation so they can get back to their core job, and those affected will need to keep a keen eye on Brexit negotiations as details of the future UK-EU relationship begin to crystallise.”
Ian Kelly, group CEO of Augentius, said: “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.”
Augentius, which asked over 100 managers and investors from across the globe, found that because of these views, ongoing Brexit negotiations are not having a “significant impact on fundraising and investment”.
Some 42 percent of European general partners said Brexit would have “no real effect” on global investment compared to 55 percent and 70 percent of Asian and American general partners, respectfully.
In the survey results, it said: “For all the sound and fury Brexit continues to cause in the news, very little is yet known about how it will affect the landscape of the UK and European market, and the extent to which (if any) the UK market will shift in its relationship to the continent [...] suggesting that the general uncertainty is allowing for a ‘wait and see’ attitude before any big decisions are made.”
It added: “However, a minority of investors do report being more conscious of their managers’ strategies in light of possible Brexit outcomes.”
By contrast to UK and European thought, Augentius stated that its answers from the US and Asia were “more bullish” when concerning the market climate.
It explained: “Although the industry overall is feeling positive, on the investor side, sentiment is a little more conservative but nevertheless, they reported no change to their appetite for investing in UK based funds.”
Augentius found that a similar regional split was seen in managers’ views on what they found most challenging over the past year.
It said: “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.”
Augentius stated that Asian and American opinion on the investor side, sentiment seemed more conservative.
When asked how they would compare the sector in 2017 to the previous year from an investment point of view, a majority of Asian and American firms felt it had either stayed the same or become less attractive.
The survey also indicated that investors remain very favourable towards the aspects that third party administrators can add to the process.
Some 88 percent of limited partners said that third-party administrators provide better independant insight and 63 percent of limited partners asked said third-party administrators were good value for money.
Elsewhere, Augentius’ survey indicated that the industry is continuing to significantly increase its spend on cybersecurity to meet growing threats.
A large majority of UK, European and American managers significantly increased their cybersecurity spending during the last year, and when asked said they intended to do the same over the course of 2018.
Augentius warned: “The private equity and real estate industry is increasingly realising that is it a prime target for attacks, and that outdated approaches to infrastructure and security are leaving it uniquely vulnerable.”
Again the private equity and real estate investors found that Asian and American outlook differed to that of UK and European investors. A slight majority of Asian general partners invested less in 2017 than the previous year, and an even larger majority intend to spend less in the year to come.
Though an increase in cyber security was still evident in both continents.
Looking ahead, Augentius concluded: “On a global level the findings paint an upbeat picture of
an industry coming off the back of a better-than-expected 2017, and looking forward to another year of opportunity.”
“However, it also highlights a number of potential headwinds and challenges, both immediate and on the horizon, that firms could do well to be wary of.”
“In Europe especially, firms need to ensure they are effectively navigating regulation so they can get back to their core job, and those affected will need to keep a keen eye on Brexit negotiations as details of the future UK-EU relationship begin to crystallise.”
Ian Kelly, group CEO of Augentius, said: “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.”
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