News & Analysis

Listed PE buffeted by Brexit market freefall

Listed funds of funds managed by HarbourVest Partners and SL Capital Partners were among vehicles that had drops in their share price after the UK's referendum result on Thursday.

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Several private equity firms listed on the London Stock Exchange have not escaped the effects of the UK’s decision to leave the European Union, including vehicles that invest in secondaries funds.

The UK’s decision to leave the European Union on Friday sent markets into a tailspin with the FTSE 100 plummeting from just over 6,334 points on Thursday to close on 5,982 on Monday. Sterling nosedived to a 30-year low against the US dollar and the price of gold spiked to a two-year high as investors sold off riskier assets and sought a safe haven for their capital.

Shares in SL Capital Partners‘ listed fund of funds, Standard Life European Private Equity Trust, fell 3.4 percent between Thursday and Monday’s close.

Shares in HarbourVest Partners‘ listed fund of funds, HarbourVest Global Private Equity, took a modest hit of 4.6 percent, falling from 917 pence ($12.12; €11.0) per share on Thursday to 875 pence as of Monday’s close.

HarbourVest issued a statement on Friday in response to the referendum outcome and the subsequent resignation of Prime Minister David Cameron, in which it said it expected London to remain the firm’s regional hub for its activities in Europe, the Middle East and Africa.

“HarbourVest has adapted to many changes in European regulation, including the recent introduction of the Alternative Investment Fund Managers Directive, and we are confident that HarbourVest has the necessary in-house experience to handle a transition to new rules,” the statement read.

Douwe Cosijn, chief executive of LPEQ, the international association of listed private equity companies, told sister publication Private Equity International that although investment companies will likely be less impacted than the broader financial services sector, they are “not immune from some of the turmoil that is anticipated” and how that will impact financial services stocks.

A Brexit would create “both challenges and opportunities for investment”, but that in the near-term “share-price performance will invariably be impacted by the broader uncertainty across the macro-economic outlook and the financial services sector in its entirety,” Cosijn said.