How will private equity funds absorb the “Brexit” shock?

eFront Software Solutions2016 Front Line Newsletters NewsHow will private equity funds absorb the “Brexit” shock?

Jan

4

January 4 , 2017 | Posted by eFront Solutions |

How will private equity funds absorb the “Brexit” shock?

Private equity investment is well suited to finding opportunities within an uncertain environment, and the aftermath of the UK’s vote to leave the European Union surely qualifies. But while the opportunity to help businesses adjust to the new environment may result in attractive investments over the medium and long term, at a fund level, such macro-uncertainty carries risks. So far, UK and European stock markets have shrugged off Brexit-related fears, and fund NAVs have proven similarly robust. But there is a long road ahead before the nature of Britain’s exit from the EU is clear and we may face periods of significant volatility.

By using Pevara data to look at historic periods of volatility, this edition of Front Line shows how the Brexit effect could play out from a fund perspective. What would be the reaction of managers and NAVs? Could there be a denominator effect? We seek to answer these questions and, as ever, would welcome your comments on our observations and conclusions.

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