Private equity to spend in UK financial services

With banks and other financial services businesses looking to scrap non-core assets, more than two-thirds of private equity houses are planning to spend in the sector in Britain, a new survey from Grant Thornton shows. 

Some 68 per cent of buyout firms plan to invest in financial services in the UK in the coming year, but looming regulation has been off-putting.

A massive 90 per cent of those surveyed anticipate increased activity in the space, a symptom of 2008’s banking crisis that saw Lloyds and RBS bailed out with public funds. 

However, the appetite to invest in media and support services still trumps financial services. 

Ambiguity surrounding impending Basel III and Solvency II regulations are causing concern for private equity, with some 58 per cent of respondents rating regulation as a primary challenge, while 93 per cent say this will be important in shaping funds’ appetite. 

“While some private equity houses see regulation as a deal breaker, regulation can be seen as providing some attractive buyout opportunities,” says Peter Allen, partner and head of financial services at Grant Thornton. 

“And indeed, while regulation increases the cost of running a business, those businesses that do survive are stronger for it.”

Read more from our sister title Real Deals.

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