The Brexit effect: private equity firms shun UK for Europe

The main issue for private equity firms when it comes to British companies is the difficulty of assessing the risk they are acquiring. Even seasoned investors such as Howard Marks, who have made hundreds of millions of dollars investing in high-risk situations, are not sure how to go about investing in the UK. “Whether to invest in anything is always a question of the relationship between price and value, as well as the outlook for value,” says Mr Marks, the co-founder of Oaktree Capital who has made himself a billionaire from a career of investing in complicated deals such as raising large distressed debt funds to invest in undervalued assets. “I don’t know enough about these things to know whether the balance is currently attractive.” He adds: “All I know is that value in the UK is reduced from what it was two to three years ago, because Brexit introduces so much uncertainty and downside risk . . . maybe they’ve moved down so much that assets are cheap.” James Seagrave, global head of financial sponsors coverage at BNP Paribas in London, says the UK market has become “sclerotic” as a result of Brexit.