This week Lyceum Capital made its first deal-by-deal investment, buying UK document management business DMC Canotec.

The firm has been the subject of much speculation since it scrapped fundraising plans in January and switched to a deal-by-deal approach. While press coverage at the time flagged Brexit as a major headwind, there were other factors at play. As the firm told market contacts, a third of its LPs had stopped investing for reasons unrelated to Lyceum. In terms of performance, while the firm could point to the 2.6x cash it had returned to investors from its 2008 fund, its 2013-vintage fund – at that stage valued at 1.5x – had not distributed any capital.

With some major resignations from UK government posts this week, Brexit is as ‘top of mind’ as ever. But is uncertainty around Brexit the investor deterrent that some would have us believe? ECI would probably say ‘no’. The UK-focused firm closed its largest-ever fund on £700 million ($929 million; €791 million) in just 80 days. Track record trumped geopolitical worries.

US investors played a greater role in the ECI fund compared with its predecessor, while continental European capital was dialled down. This was not a Brexit issue, ECI tells us, but a simple matter of timing and chance. Some European investors couldn’t close in the compressed fundraising timeframe and some institutions had pulled their fund programmes altogether.

Nevertheless, we have been told Europeans are pulling back from the UK by plenty of market participants. For example, Apiary Capital, set up by a former Bowmark Capital exec, held a final close on £200 million this week. Its managing partner Mark Salter told us Europeans had been more nervous about the UK macro story than Americans.

Brexit is, to some, only the second-largest UK political concern. As one Nordic fund investor told us this week, the prospect of a Jeremy Corbyn-led government – with its promises of  wide-ranging nationalisation and the marginalisation of private capital – is a far greater deterrent.

Another fund investor – based in London – says he will only be committing client money to UK managers if the clients are sterling-denominated, to avoid accumulating political and currency risk.

Brexit – whatever it looks like – and the threat of a Corbyn government are undeniably affecting investor decisions. “It’s fair to say there were a bunch of investors who liked the proposition, liked us, that didn’t really pursue it because of Brexit,” says  Salter.

Yet the numbers do not support talk of a Brexit chill. The amount of capital raised for UK-focused funds (excluding funds that invest elsewhere as well) in 2017 was $4.5 billion, according to PEI data. This is above the previous five-year average of $3.2 billion. This year is set to be higher still.

Managers in the UK are still being judged on merit rather than macro issues. UK stalwart Graphite Capital is likely to close its latest fund within the next two weeks, market sources tell us, while Exponent Private Equity, another longstanding UK GP, is raising capital steadily despite having to curtail plans to dramatically increase its fund size.

The UK is still Europe’s largest private equity market. Limited partners have to weigh the country’s political unknowns against its established track record and – importantly – abundant supply of investible managers.

Write to the author: toby.m@peimedia.com