Brexit: Expert explains why UK won’t rejoin EU
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Vindi Banga, a senior partner at private equity fund Clayton, Dubilier and Rice, which owns the supermarket Morrisons, said private equity firms still very much had an appetite for UK-based companies after Brexit. Speaking in Davos at the gathering of the World Economic Forum, Mr Banga said there would be “lots of deal-making” on the horizon.
He said the Ukraine war would likely play a part in how the private equity firms calculate which UK-based companies to snap up, as they look to keep supply chains close to home.
This is just one element of the “transition” areas eyed up by businesses, including climate change and digitalisation.
Mr Banga said the UK is seeing an “enormous uptick in activity for private equity”, although a certain amount of uncertainty remains at the moment.
He said: “There will be lots of deal-making.
“There is uncertainty now so things have slowed down.
“But there are some pretty big issues that businesses need to factor in.”
But for the private equity firms in a position to make the most of businesses needing picking apart or piecing back together, there are likely to be a host of opportunities in post-Brexit Britain.
Firms like CD&R are poised to wholesale purchase struggling businesses, or take on those that can be broken down for parts, Mr Banga said.
This comes after CD&R predicted Brexit would damage its business, but the pessimistic forecasts have not materialised.
Another consideration for companies listed on the stock market would be how leaders approached business models in a post-Covid world.
This includes conversations about whether firms would fare better under private ownership.
And many of these firms would be perfect for private equity firms to snap up, Mr Banga said.
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This is partly down to their current prices not matching up to what he called their “intrinsic value”.
The UK was scarcely represented at the World Economic Forum in the Swiss town of Davos, as the Government failed to send any high-ranking ministers to the summit.
The Chancellor, Rishi Sunak, did not travel to the continent for the conference, although CP26 minister Alok Sharma and investment minister Lord Grimstone did make the trip.
This comes as UK finance bosses and Government officials complain of the Swiss town’s transformation into a party destination, and sketch out plans to establish a new economic summit that would not become a “mini Davos”.
One CEO of a FTSE 100 company told the Telegraph that the separate, breakaway summit would be a “great idea”.
He added: “Davos has become too nebulous and distant from real business issues.
“A regular event that brings only the real movers and shakers to London could have a massive impact.”
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