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Terra Firma’s King: Brexit is disrupting business

Brexit is a large contributor to challenges that have plagued Terra Firma’s portfolio company Four Seasons Health Care, he said at a PEI conference in New York.

The looming threat of Brexit has created challenges for portfolio companies such as Terra Firma Capital Partners’ Four Seasons Health Care, which is set to go through a financial restructuring, according to Justin King, vice chairman and head of portfolio businesses at the firm.

“It’s been incredibly disruptive to business operations,” said King, who was a supporter of the “remain” campaign, during the PEI’s Operating Partners Forum in New York on Wednesday. “This is a disaster for the country.”

King explained that Four Seasons Health Care and the UK healthcare industry as a whole are highly reliant on European nurses coming to work in the UK but that the vote for the UK to leave the European Union has impacted the supply of nurses.

“A year ago about a thousand a month were registering to work in the UK, now that number is nill,” he said. “And there’s no good data, but you can be pretty sure there’s a good few leaving too.”

He noted that 62 percent of the company’s turnover is labour and that the shortage of specialised labour prompted by Brexit has impacted the business.

“There are many reasons for the challenges that the business is facing, but Brexit is a big part of it,” said King, who joined the firm two years ago. Terra Firma bought Four Seasons in 2012 out of two bankruptcies.

King also noted that the disruption prompted by Brexit has also brought forward some business opportunities.

The London-based firm currently has nine portfolio companies including Four Seasons. It launched fundraising for its latest vehicle about a month ago, seeking €3 billion for Terra Firma Capital Partners IV.

According to figures calculated using data from Canada Pension Plan Investment Board, Terra Firma Capital Partners III – the fund which bore the brunt of the EMI loss – had achieved a net multiple of 0.66x as of September 2016.