Speaking at the sidelines of the SuperInvestor conference in Amsterdam on November 16, James Brocklebank, a managing partner at Boston-based Advent, said that the uncertainty that Brexit has created means the UK will face “significant challenges” in the next two to three years.
He said: “We need clarity. Will it be a hard or a soft Brexit? Where are we?”
He suggested that the UK could lose out on a significant amount of investment and said that one of Advent’s portfolio companies was “seriously considering” opening an office in the UK, but has since opted for an office in continental Europe instead because of the uncertainty over what Brexit will look like.
Brocklebank declined to disclose the name of the company but said “the point is that if you multiply this by thousands of companies, the uncertainty around Brexit will have a material impact on the UK”.
During a panel discussion Brocklebank also said that the Brexit negotiations could be “unreasonably tough” because German chancellor Angela Merkel will want to make it difficult for countries to leave.
He said that the vote for Brexit should not be seen as a trend in isolation and mentioned the upcoming Italian referendum and elections in Austria, the Netherlands, Germany and France, saying it will be interesting to see how Europe reacts to “this wave of populism in the US, the UK”.
During a separate panel discussion, Dan Quayle, former vice president of the US and chairman of Cerberus Global Investments, said that he expects Britain’s departure from the EU will “probably be a longer, softer Brexit. I don’t think a hard Brexit will be in anyone’s interest. But Prime Minister May has got to figure out how this court decision will…impact the process.”
However, both Quayle and Brocklebank said that long term it would probably be a good thing for the UK to be outside the European Union.
Brocklebank added that despite the current uncertainty Advent is still hunting for deals in the UK. “Uncertainty throws up opportunities. We made some of our best investments in times of uncertainty,” he said.
Quayle said: “From a financial point of view, from an investment point of view, I don’t think [Brexit] will be very draconian. Personally, I think it will be a good thing, and it will free up things that Britain can do.”
He made a comparison between the Brexit vote and Donald Trump’s arrival in the White House and relayed a conversation he had with a fellow passenger on arrival at Heathrow Airport who complained about the rules relating to the size of fruit and vegetables that were imposed on the UK by the European Union. He said the dismay about immigration and “that heavy-handed regulation coming from Brussels” is similar to why the US voted for Trump. “The regulation, the taxation – Washington wasn’t listening and I think that there’s a lot of similarities between Brexit and the rise of Donald Trump.”
Meanwhile, Jean-Baptiste Wautier, managing partner at BC Partners, said in another panel that Brexit had already provided the firm with good investment opportunities. “We signed a deal, just two weeks before Brexit and we managed to reprise that deal because for those two weeks, markets were totally panicking. Private equity is very good in using those windows of volatility.”