Tuesday 14 September 2021 9:35 pm

Sunak: Private equity raid on UK businesses 'good news' for economy

Foreign investment firms’ recent surge of interest in British listed companies is a “sign of confidence” in the UK economy, chancellor Rishi Sunak said on Tuesday, while also touting British fintech and life sciences companies as “globally best in class.”

On the same day that Clayton, Dubilier & Rice cemented its pole position in a months-long £9bn US private equity bidding war for supermarket Morrisons, Sunak said such deals indicated a positive perception of the UK economy.

“I would view it as a sign of confidence in the UK,” he told reporters at a tech conference in London.

“If international investors, whoever they are, are keen to invest their capital in the UK, that is something that is good news for our economy,” he said.

Global private equity investors have emerged as the winners from the coronavirus pandemic and are flush with cash: $1.3 trillion, in fact, according to the latest PitchBook data.

And their eyes are all on corporate Britain. Private equity buyouts of UK firms are up almost 60 per cent in 2021 compared with the same period pre-pandemic in 2019, while those of European firms are up just 14 per cent, according to Refinitiv data.

Another British company being targeted is chip maker ARM, which US chip designer Nvidia is seeking EU regulatory approval to acquire.

But asked whether he would rather see ARM listed in Britain than snapped up by a US firm, Sunak refused to comment due to the ongoing regulatory process, instead insisting: “Whether it is ARM or anyone else, I want to make (Britain) an incredibly attractive place for companies to raise capital.”

Sunak’s comments came as the Treasury announced it had taken stakes in more than 150 companies during the pandemic through its £1.1bn state-backed Future Fund, including a cinema chain, a CBD oil maker and a kombucha drinks brand.

An additional £375m of the fund will be allocated towards investments in homegrown tech firms.

While the chancellor was not averse to foreign investment in British firms, he emphasised ongoing reforms that will make the UK a more attractive location for startups to scale and eventually list.

UK competitive advantage

Pressed on how the UK compares to global tech hub rivals in the US and China, Sunak told a group of investors and tech bosses that despite their advantage of very large domestic markets, “I don’t see that as a barrier to our success. The UK has plenty of other things going for it that they don’t.”

The chancellor cited fintech and life sciences as “two areas where we are absolutely globally best in class,” and the UK’s university research as “fantastic quality.”

“The financial services is something that the UK does really well, we’ve got regulators that get that,” he added. “I think they are far more supportive of innovation than regulators in the US are.”

In a bid to drive UK economic growth post-Brexit and pandemic, Sunak announced a set of new immigration reforms in the spring budget to help homegrown companies attract global talent.

Referencing these and the UK’s booming fintech scene, Sunak described the UK as “a magnet for high quality people in a way that I don’t actually think some of these other places are.”

“I feel pretty optimistic that we can compete [with China and the US].”