According to a survey by London-based stockbroker Numis, 73% of UK-based PE professionals polled said their pipelines focused on UK-listed companies—with the vast majority, 92%, eyeing take-private deals.
This comes after the pound hit a record low against the dollar in the wake of former UK Prime Minister Liz Truss’ so-called mini budget in September. On Monday, the pound rose against the dollar when Rishi Sunak was tapped to become the nation’s new prime minister, replacing Truss.
So far in 2022, there have been 10 PE-backed UK take-privates worth a total of €14.59 billion (about $14.3 billion), according to PitchBook data. Energy Capital Partners agreed to a £1.3 billion (about $1.47 billion) take-private of waste management company Biffa in September.
A further 83% of respondents expected institutional investors, the largest group of owners for UK-listed companies, to be receptive to PE investment. Despite that expectation, in July, UK transport company FirstGroup‘s largest shareholder, Schroders, rejected a takeover offer from I Squared.
While UK-listed assets are in demand, financing deals is more difficult. Of the survey’s respondents, 83% described UK debt markets as “challenging.” However, the majority expect conditions to improve over the next 12 months.
Regarding exits, the near-term outlook for IPOs is less positive, with PE firms opting to take the route of private auctions. While 76% of PE respondents expect a market rebound, only 29% see it happening in the next 12 months.
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