VIEW FROM THE TOP: THE DREADED ‘BREXIT’ – WHAT ARE FUND MANAGERS THINKING?

Posted in Asset Management, Investment Banking, Private Equity on 28 February 2019

The ‘what ifs, buts and negative impacts’ surrounding the Brexit portmanteau have, it’s fair to say, dominated hiring conversations these last couple of years. At Altus Partners, we’ve naturally seen a significant wave of concern around how this potentially impacts hiring in 2019.

The last couple of years has seen a record amount of dry powder deployed and a strong and stable fundraising market. 2018 saw one the busiest summers on record for deal makers in the last few years, so could it be argued that 2019 is set up to be just as fruitful for funds alike? But what does the landscape look like once/ if the referendum has been passed? Can we expect funds to have the same appetite to hire at the current rate?

We asked over 500 clients three fundamental questions surrounding Brexit to get their view:

What is your biggest consideration when hiring in 2019?

Interestingly the consideration for funds does not appear to be political factors but in-fact diversity, as recognised in the recent article (Investors Demand More Women in Private Equity*). LP/ Investor demand to see balanced teams has become a much bigger concern in the past two years, helped by organisations such as Level 20 and PEWIN, casting a spotlight on the issue.

Have you put human capital contingency plans in place for Brexit?

Hiring during Brexit will always be subject to a relative amount of uncertainty. Firms can’t definitively forecast their hiring strategy and growth plans for funds – and respective portfolio businesses – until they know what Brexit means. The above result shows that many are in status quo, doing what little they can to ensure as smooth a transition as possible.

Does volatility due to Brexit cause you to:

The above pertains to Brexit only and as per the results in question 1, there are bigger areas of consideration for hiring in 2019. It is compelling however to see the lack of industry redundancies anticipated as a result, and the significant number seeing this as an opportunity.

2019 and beyond…

With the likes of Bruce Flatt, chief executive of Brookfield Asset Management, stating Brexit was “virtually irrelevant” during an interview at the Super Return Private Equity conference in Berlin on Tuesday and City AM reporting that the world’s largest sovereign wealth fund (Norway’s £740bn wealth fund) is taking a 30-year bet that Britain will emerge stronger outside the European Union (It would therefore increase its exposure to the country). There are reasons to remain positive.

Whilst not being able to gaze into a crystal ball, the above data and commentary supports a largely shared view that 2019 should be another robust environment for a range of fund managers. This is compounded by the war for talent which continues at a pace and the industry skill-shortage which will no doubt be exacerbated with any tightening of rules around visas. Therefore, whilst cautious about predicting the impact of short-term events, the industry is likely to see Brexit as an opportunity over threat and hiring in 2019 will remain healthy as a result.

For any further advice on moving into Private Equity then please do get in contact: oliver.noye@altus-partners.com 

* https://www.penews.com/articles/investors-demand-equality-in-pe-20190207

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