Private equity executives at Blackstone and other large US buyout firms in London could see their take-home pay go further as a result of Brexit.
Blackstone pays many of its staff in US dollars before converting these into British pounds. And with sterling hitting a 31-year low on June 27 (£1/ $ 1.3) in the wake of the UK’s decision to split from the EU, that means more buying power for dollar spenders.
One executive working at Blackstone told Financial News before the vote that while he did not want the UK to leave, a drop in the value of the pound would be good for his take-home pay. Another said his bonus was paid in US dollars and calculated on an average exchange rate across the year.
Edmund Thomson Jones, a director at private equity recruitment firm Kea Consultants, said it was common for top executives at US private equity firms to be paid their salary, bonus and carried interest in the same currency as the fund they invest from – typically US dollars. Junior executives, he said, were more likely to be paid in British pounds.
Jones said he had “spoken to a couple of individuals who are mourning the fact that they are doing better out of this” because they did not want to be seen to be profiting from a referendum outcome they did not want.
The average managing director working in private equity and venture capital in London earns around £330,000 ($ 429,559) per year in salary and bonus, according to data from salary benchmarking site emolument.com.
A potential boost to take-home pay is not the only silver lining for the private equity industry to emerge from the shock referendum result. Buyout executives told Financial News last week that market turbulence would provide ample opportunity to snap up companies on the cheap.
William Jackson, managing partner at Bridgepoint, described volatility as the “oxygen of private equity investing”, while Jeremy Hand, the co-founder of UK mid-market firm Lyceum Capital, said: “Though I’m sad and disappointed about a Brexit, there’s bound to be opportunity in the new environment.”