UK M&A is on “hiatus” but will recover whichever way EU vote goes, says private equity chief executive
The chief executive of private equity company 3i has told how there is a “hiatus” in UK mergers and acquisitions (M&A) activity in the lead up to the EU referendum.
But Simon Borrows told Morning Wire activity will pick up after the summer no matter which way the vote goes.
Shares in the buyout firm were up by around three per cent today, to 504p, after it reported a 17 per cent increase in its net asset value to £4.5bn.
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In the year to 31 March, 3i reported its operating profit had risen from £721m to £920m.
The company, which completed a three-year restructuring last year, reported a total return of £824m, up 25 per cent year on year. And its dividend for the year totalled 22p, up from 20p.
On the M&A climate, Borrows said: “We see a hiatus in the UK in transaction activity leading up to the referendum. So we’re not seeing many IPOs in the UK market and we’re not seeing a lot of mergers and acquisitions.
“But I think once the vote is out of the way then I would expect that to return. I don’t think that’s a permanent feature, I think it’s just people holding fire before they have a bit more certainty one way or the other.”
He added: “I don’t think it’s affecting other geographies. We’re very [actively] looking at deals across continental Europe and across North America.”
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Asked if he expected to see a pick-up in activity after the referendum, Borrows said: “I think there will be, once the result is known one way or the other, there will be an inclination to move on with things. But I think it will take until September to digest and get that moving.”
He said 3i has been “very busy” on realisations and investments this year, but added: “As I’ve said, we’ve been doing much of this outside of the UK.”