Yet another article/report comes out saying what a bumper year 2016 was for Foreign direct investment (FDI) into the UK.
Without doubt the devaluation in sterling and the relatively liberal takeover rules in the UK triggered significant FDI. This is important, as while the UK companies are fixated by what Brexit means, foreign investors are taking a long term view beyond Brexit.
Global M & A is far more likely to be influenced by the America First policies of Trump then a Brexit. However, it is important that the UK now looks beyond Brexit. European companies are now considering what they need to have to get tariff free access to the UK and we are seeing a small, but statistically significant increase in French, German, Italian, and Nordic buyers into the UK.
What seems to be lagging behind is the UK buyers thinking about what they need in Europe post Brexit. This could be because UK companies are still hopeful there will be a light Brexit with a status quo being somehow protected. That is a riskier approach though and could be borne out of a fixation with the process itself in the UK. Every UK Board should be deciding what they need in continental Europe in 2020.
UK private equity is also nervous; an investment now with an exit in 2020 looks risky as it still unclear what leaving the EU will mean. That said, it could be the time for UK private equity to look at Europe in a different way. So lets start looking at 2020 and what operations companies want in a world where the UK is separate from Europe - not just geographically but commercially.
Foreign takeovers in the UK hit record levels last year as Megabrew and BG-Shell deals