UK Fundraising Report: Weathering the Brexit storm

Private equity fundraising in the UK over the first five months of 2019 looks set to arrest its decline in 2018, with 21 funds raising a cumulative €17.93bn by the end of May. This compares with 23 funds raising €15.21bn in H2 2018, and 25 funds securing €21.03bn in H1 last year. 

2019 numbers to date have been bolstered by the €10bn final close of the Seventh Cinven Fund, which hit its hard-cap in early May. Besides this, only three other funds raised a billion euros or more: Carlyle Europe Technology Partners IV (€1.35bn), Novalpina Capital Partners I (€1bn) and Investcorp European Buyout Fund 2019 (€1bn). Inflexion has also raised more than €1bn during 2019 so far, though across two separate vehicles. This dearth of larger funds continues a trend seen last year; back in 2017, 17 €1bn+ funds held a final close, but in 2018 there were just eight. With 10 €1bn+ funds currently in the pipeline, however, this trend may be the result of cyclicality amplified by the smaller number of managers able to attract this volume of capital. 

While fundraising in the UK has stabilised following the sharp drop from 2017 to 2018, buyout activity so far in 2019 has been muted, with 76 deals inked to the end of May at a cumulative enterprise value of €9.99bn. In contrast, H1 2018 saw 115 deals worth €17.05bn and H2 2018 recorded 118 deals worth €16.74bn, broadly in line with 2017. 

Unsurprisingly, the political situation is chief among investors’ concerns surrounding the UK. “So far in 2019 it’s been a continuation of 2018, with Brexit dominating the landscape,” says Sunaina Sinha, managing partner at Cebile Capital. “There was an expectation that, regardless of a deal being made or not, by now there would be clarity on what would be happening. The fact this hasn’t materialised is largely why LPs are putting their UK allocations on hold.”

Although 2019 is highly unlikely to match the stellar 2016 and 2017 vintages for the total value of capital raised by UK-managed funds, indications in the first five months of the year show the market is showing resilience in the face of significant macroeconomic turbulence.

Click here to download the latest UK Fundraising report, which also explores detailed statistics and the upcoming pipeline for UK-based PE vehicles

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