Brexit would discourage investment, says Invest Europe

The industry body’s opposition to a Brexit is in line with most private equity firms, according to new research.

Invest Europe is the latest organisation to oppose the UK’s possible exit from the European Union. “As the voice of European private equity, venture capital, infrastructure investment funds and their investors, Invest Europe would welcome a decision by the British people to remain in the EU,” Invest Europe said in a statement given to pfm.

“While the decision is one for the UK electorate, we believe that a vote to leave would result in considerable uncertainty that will discourage investment and damage both the UK and the wider EU economy,” Invest Europe added.

The UK public will vote on whether the country should remain part of the EU in a referendum on 23 June.

The Organisation of Economic Development (OECD) stated its opposition to “Brexit” at the end of April. “The UK is much stronger as a part of Europe, and Europe is much stronger with the UK as a driving force. There is no upside for the UK in Brexit. Only costs that can be avoided and advantages to be seized by remaining in Europe,” said OECD secretary general Angel Gurría.

In the run up to the EU referendum, a number of surveys have shown that a large majority of those in the private equity industry want Britain to remain in the EU. A recent survey of 200 firms in private equity and real estate by fund administrator Augentius found that 85 percent of the European and 81 percent of the US firms oppose the UK leaving the EU, as reported by Private Equity International.

The same report highlighted that in the UK itself, 73 percent of firms oppose Brexit, significantly higher than some 47 percent of the general UK population opposing it. According to Augentius, this suggests the UK’s membership of the EU is more beneficial to firms in Europe and the US than for the UK firms.

In March, 75 percent of private equity practitioners expressed their desire for the UK to remain in the EU in a poll run by PEI.

The UK has a strong and influential voice in helping to ensure that EU policies enable the private equity industry to invest on behalf of pension funds, insurance groups and other institutional investors into growing and dynamic enterprises, Invest Europe also said in the statement. At the same time, EU membership affords British private equity-backed companies open and fair access to EU markets, as well as the benefits of bilateral free trade agreements that support sales, growth and jobs.

The upcoming referendum is also putting a brake on deal activity. In the first weeks of 2016 to mid-March, there were 127 private equity-backed acquisitions in Europe worth a combined $6.36 billion, while 55 exits valued at $13.79 billion were completed, according to data from Dealogic. This represents a marked slowdown compared with last year. In Q1 2015, 210 acquisitions worth $18.1 billion closed, while 119 exits worth $28.75 billion were completed, as reported by PEI.

According to a poll of polls at the beginning of June, the electorate appears marginally in favour of staying in. But the result remains too close to call, with bookmakers putting the chances of a “leave” vote at around 30 percent.