UK private equity buyout activity comes through Brexit vote unscathed in July

William Turvill
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The UK voted to leave the European Union on 23 June (Source: Getty)

UK private equity buyout activity has been unharmed by the Brexit vote, new research suggests.

Over the course of July, 16 such deals were recorded by Unquote researchers – ahead of 15 tracked in the same month last year.

July was also the second most active month for private equity-backed buyouts this year, behind 19 in April, and up from nine in June. But Unquote found deal values were generally lower this year, with July’s 16 deals worth £1.1bn, compared with 15 in July 2015 at £2.1bn.

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“The total of 16 private equity-backed buyouts recorded by Unquote Data in the UK during July actually compares very favourably with the numbers seen in the same month of 2014 and 2015, hinting that the effects of the 23 June referendum on M&A dealflow may be over-estimated or delayed,” said Julian Longhurst, Unquote’s head of research.

“That said, it is important to note that these deals were mostly at the lower end of the market and there has been a noticeable lack of transactions valued in excess of £250m; as a result the overall amount of capital deployed in July was almost half of that recorded during the same period last year.

“The resilience of the core smaller market segments so far is definitely encouraging, but monitoring dealflow across all value segments from September onwards will be a more telling bellwether of the market’s health in a post-referendum landscape.”

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An Unquote report conducted with SL Capital Partners found an 11.7 per cent year-on-year drop in private equity-backed deals across Europe in the first half of this year.

At the end of last month, Simon Borrows, the chief executive of London-listed private equity firm 3i, told City A.M. he is expecting a pick-up in M&A activity after the summer.

Borrows also said that, since the EU referendum, it had been “life as normal” for 3i.

He said: “We haven’t seen any significant impact [from the vote]. We had a very busy first quarter, and realisation and investment activity has continued beyond 30 June. We at 3i haven’t seen any reduction in activity.”