PRIVATE equity firms are on course to execute a flurry of deals over the summer as a “new normal” is ushered in following the triggering of Article 50, according to a magic circle law company.
Charles Hayes, partner at Freshfields Bruckhaus Deringer, said last year’s deal-making lull following the Brexit vote has given way to heightened activity now that Britain has officially begun divorce proceedings with the EU.
The comments came as the number of London private equity (PE) deals reached its highest monthly level for more than a year in March. Figures sourced from industry data provider Preqin showed the capital’s deal count had climbed 78 per cent to 16 last month, up from nine in January.
Hayes said PE firms were ready to make investments and were eyeing opportunities in the pharmaceutical and financial services sectors.
He said: “We saw a hiatus after the EU referendum last year. Since then, a lot of private equity firms have priced in Brexit. They knew Article 50 was coming, and now the notice has been served, we have entered a new normal with higher deal activity. We are expecting an uptick after Easter, with a lot of processes now under way, agreements in principle and debt widely available.
“By pricing in Brexit, PE firms are able to commit capital and execute deals they have had in the pipeline.
“PE investors have shown themselves consistently able to deploy capital in varied markets. They have a clear line of vision, they have adjusted to the new normal and they’ve been able to price the risk going into Article 50 territory.”
L’Oreal’s sale of The Body Shop could be driven through in the summer, with reports suggesting 15 private equity firms are mulling a bid. The struggling British toiletries and skin care retailer, which employs 22,000 people in 66 countries, is believed to be on the market for around €1 billion (£848 million).
Hayes said: “We have seen a lot of interest in L’Oreal’s sale of The Body Shop. It will be interesting to see how that plays out in the summer. While it is an international business, The Body Shop’s significant presence in the UK will make the deal an interesting barometer of confidence levels in the British high street.”
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here