After Britain’s vote to leave the European Union, about 30% of private capital operators having headquarter in UK have decided to leave the country and move to Continental Europe (about 13%) or are uncertain about what to to do (about 17%).
This is the result of a survey by Preqin among 142 alternative assets firms and 50 institutional investors to gauge their reactions and expectations following the vote (75 private capital operators and 67 hedge funds, see here the Special report by Preqin).
They are funds managing a huge pile of money. UK private capital AUM stands at a record $490bn, an increase of $30bn between the end of Q4 2014 and the end of Q3 2015. Private capital AUM in the rest of the EU stands at $333bn as of Q3 2015, and has seen a 55% increase in assets from December 2010, compared to 40% growth for the UK industry as a whole in the same period.
While there will be no immediate exodus of UK-based alternative asset fund managers, there are notable proportions of managers that are considering their position (7%) or are uncertain (17%) about their operations remaining in the UK. Private capital fund managers are more likely to be considering a move than hedge fund managers (13% vs. 3% respectively), while 17% of private capital managers and 17% of hedge fund managers are still uncertain about what to do. Anyway the largest proportion (45%) of private capital managers believe the Brexit decision will have no effect on their portfolio in the next 12 months.
Things are different in a longer term perspetive as 13% of private capital managers think Brexit will have a negative impact on their portfolio while 38% of them are uncertain and 40% think there will be no impact.
As far as new investments are concerned, the largest proportion (41%) of managers will continue to make the same number of investments in the UK in the next 12 months as expected before the result of the referendum was announced. Private capital managers are more bearish than their hedge fund counterparts: 29% believe they are likely to make fewer UK investments, compared with 11% of hedge fund managers. In the longer term, again there is a greater level of uncertainty, with more than half of private capital managers and a third of hedge fund managers unsure of the impact of Brexit on the number of UK investments they will make in the longer term, with very similar proportions thinking that UK investments could increase or decrease.