Coller: Brexit will lead to lower asset valuations

Coller Capital expects to see reductions in some asset valuations in the medium term as a result of Britain’s decision to leave the EU, according to a UK regulatory filing with Companies House.

Brexit has added a layer of uncertainty to what was an otherwise encouraging economic picture, Jeremy Coller, the secondaries firm’s founder and chief investment officer, wrote in a 5 July note prefacing the firm’s strategic report for the year ended 31 March.

“The threat posed by protectionism … political inertia in multiple countries – exemplified especially by Europe’s slow progress on structural reform and the economic integration of the Eurozone; and the declining effectiveness of monetary stimulus,” are macro level challenges the firm is concerned about, Coller wrote.

The report was filed with Companies House on 21 July.

The firm expects its funds to prove resilient as they are dollar-denominated, long term in nature and diversified by geography and currency.

“For CIP VII, our fund currently in its investment phase, market dislocations are likely to create opportunities,” Coller wrote.

The London-headquartered firm estimates there was $55 billion of dry powder at the beginning of the year, equating to 1.3 years’ worth of deals at current market volumes.

“Despite the large pool of capital available to buyers, the market feels well balanced,” Coller wrote, citing last year’s large number of sellers, $40 billion in deals and stable pricing.

While pension funds as sellers and GP-led restructurings are on the rise, Coller Capital’s main investments come from a mix of financial institutions as sellers and other investors with complex liquidity needs, according to the report.

Coller Capital’s operating profit for the year ended 31 March rose almost 40 percent to £2.91 million ($3.8 million; €3.5 million) from £2.09 million for the previous year, while revenue jumped to £64 million from £47.3 million.