Private equity bosses invest in Brexit vote

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With the referendum on the UK’s membership of the European Union looming large it is time for Britons to make up their minds.

At a recent panel discussion organised by the Association for Corporate Growth in London, Brian McDonnell, a partner at law firm Addleshaw Goddard, accurately summed up the debate. “There are no facts, only interpretations,” he told the audience, quoting Friedrich Nietszche.

According to a poll of polls, 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.

Members of the financial services community, however, are not leaving the outcome to chance. Data published by the Electoral Commission in early May revealed that from 1 February to 22 April donations to campaigns backing both sides totalled £15.6 million ($22.6 million; €20.1 million).

Thanks to a £3.2 million donation from Peter Hargreaves, founder of financial advisory firm Hargreaves Lansdowne, donations to the “leave” campaign outweigh those backing “remain”. Just under half of total donations came from those within the financial services sector.

KKR’s European head Johannes Huth, who has said a British exit from the EU would be disastrous for the British economy and would likely cause the firm to relocate some of its London operations, has donated £20,000 to Conservatives IN, the Conservative campaign to remain in the union.

Warburg Pincus managing director Joseph Schull has made donations to the cross-party In Campaign totalling £100,000, while senior executives associated with TowerBrook, Bridgepoint, Bain Capital and Searchlight have also made combined donations of more than £55,000.

On the other side of the fence, Better Capital founder Jon Moulton donated £10,000 to Vote Leave. He was joined by Jon Moynihan, co-principal at Ipex Capital, who donated £50,000.

Moynihan, a panellist at last month’s ACG discussion, told Private Equity International that the idea that financial institutions would leave London in the event of a “leave” vote was “for the birds”.

“They all said the same things when [the UK decided] we [were] not going to join the euro. None of what they said came to pass. It’s just political rubbish,” he said.

Moynihan added that he thought it “unlikely” that there would be a sharp decline in private equity deals in Europe following a Brexit, and that it could be beneficial for some firms due to the jettisoning of burdensome EU regulation.
“Deals within the UK and deals with countries outside the EU will be growing and they’ll be much easier to do in [the] more liberated environment that we will have here in the UK,” he said.

In a poll by PEI earlier this year, 75 percent of private equity practitioners voted for the UK to remain in the EU, with 67 percent of UK-based general partners believing their businesses would be worse off if Britain votes to leave.

Panellist Nick Campsie, representing Britain Stronger in Europe, a campaign group, said there would be a period of at least five years of “manifest uncertainty risk” surrounding investment following a “leave” vote. “As an economy we do two things really well: we export services and we import capital,” he said. “Brexit will be damaging to those two things, the only real question is to what extent.”