The number of private equity acquisitions of UK businesses has fallen 12 per cent this year, from 311 in 2017/18 to 274 in 2018/19, according to data from law firm Mayer Brown.
The firm’s corporate co-head Perry Yam said private equity fund managers were delaying investments pending the outcome of Brexit.
However, the value of private equity acquisitions of UK businesses rose to more than £30bn in the past year, driven by a number of major investments by US funds.
“A number of domestic and European focused private equity funds have significant capital to deploy, but Brexit has certainly increased caution among some,” Yam said.
“With a no-deal Brexit having become a much more realistic possibility since late July, a lot of PE managers had become even more wary. Buyers don’t want to be wrong-footed by economic upheaval, or a shift in trade policy that drives up costs and hampers returns.”
The value of deals jumped 37 per cent to £30.9bn, from £22.5bn in 2017/18 to £30.9bn in 2018/19 driven by major acquisitions by US buyers.
Major deals included the £4.2bn purchase of FTSE 100 satellite business Inmarsat by a consortium including Warburg Pincus, the £4.1bn acquisition of FTSE 250 aerospace business Cobham by Advent International and the £3.2bn acquisition of market research group Kantar, part of FTSE 100 company WPP, by Bain Capital.
“Although the number of deals may be down, the market is not too pessimistic as the aggregated financial value of deals has risen. Some major US funds are still making big deals in the UK market, and Brexit is not putting them off – the weakness in Sterling had been an attraction,” Yam said.
“The PE market in the UK is still active and primed to rebound once Brexit is settled.”