US PE stays mum on Brexit outcome

US-based GPs and LPs are choosing to wait and see what unfolds with Brexit, rather than react.

The US private equity community for the large part has adopted a wait-and-hold outlook following the UK’s vote to leave the European Union last week.

It’s no surprise that fund managers are not reacting immediately to such a political event, since private equity is a long-term asset class requiring an investment strategy that looks several years forward.

Ted Eliopoulos, the chief investment officer of America’s largest pension fund, the California Public Employees’ Retirement System, echoed what is probably the commonly-held perspective in private equity.

“We don’t fear or panic [about] these types of volatile markets,” Eliopoulos said in a video commentary following the UK referendum. “We are a long-term investor; we have a $300 billion portfolio that’s built to last and to invest for 60, 70, 80 years into the future.”

Eliopolous also noted that increased volatility in the markets can create investment opportunities, but CalPERS declined to further comment on the impact of the so-called Brexit on private equity.

All of the US-based global mega-fund managers that Private Equity International reached out to declined to comment on Brexit. For any long-term investor, it’s likely too early to tell the implications Brexit will have in the future.

That being said, one lower mid-market general partner, Thompson Street Capital Partners (TSCP), thinks European capital would continue flowing into the US.

“TSCP counts a number of European asset managers as investors in our funds,” TSCP managing director Bob Dunn wrote in an email to PEI on Friday. “We wouldn’t be surprised to see continued demand for US private equity allocations from European investors given the uncertain future of the EU after Brexit.”

The Blackstone Group, the Carlyle Group, Neuberger Berman Group and Riverstone Holdings declined to comment. KKR, Adams Street Partners, Thoma Bravo and Vista Equity Partners did not immediately returns requests seeking comments.

 

Elizabeth Wu contributed to this report.