Private equity investments in UK companies fell last year as buyout bosses postponed decisions because of Brexit uncertainty even as deals in the rest of Europe hit a record, new research has shown.
Britain, Europe’s largest buyout market, has become a riskier bet for dealmakers, who are unsure of how Brexit will play out and increasingly wary of currency volatility because of the drop in the pound.
As a result, investments in UK-based portfolio companies declined 12 per cent to €16.7bn last year, according to new data by Invest Europe.
“We are seeing a maturing of venture capital and private equity in continental Europe thanks to reforms implemented in the eurozone over the past 10 years making these countries more attractive to investment,” said Michael Collins, Invest Europe chief executive. “In the UK the heat has gone off a little bit as a result of Brexit and a broader softening of the economy.”
Mr Collins, who said some investment managers were “holding off for the time being”, stressed that Britain was still “a very attractive market” and that the year was the third-strongest for the country since 2007.
Britain has been a rollercoaster investment market in recent years. Investments rose in the lead-up to the 2016 Brexit vote but suffered a marked decline the year after, only to recover again a year later, figures by Invest Europe show.
The UK was still the main hub for fundraising, with funds reaching a new high of €49.3bn raised, according to the figures.
Industry insiders expect Britain to continue to be a less attractive destination as long as there is no clarity over Brexit.
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