Following the news that the people of Scotland have chosen to stay in the UK rather than become independent, this blog will look at the private equity firms that are currently based in Scotland and examine where they choose to invest their capital. Large financial companies such as RBS said they would have re-domiciled in London if the ‘Yes vote’ won, which suggests this decision could have had a huge impact on private equity firms.
According to Preqin’s Fund Manager Profiles online service there are 17 private equity firms based in Scotland. These firms have raised €8.3bn in aggregate capital commitments over the last 10 years with the majority coming from Edinburgh-based firms. The Scottish capital is home to seven of the 17 private equity firms, and over the last decade has collected 80% of all the capital raised by firms housed in Scotland. There are three firms based in Glasgow, two in Aberdeen and Perth, with one each in Livingston, East Kilbride and Milngavie.
The firm to have raised the most amount of capital out of any other in Scotland is fund of funds manager, SL Capital Partners. The firm’s vehicles invest in a combination of primary, secondary and co-investment opportunities. SL Capital is 60% owned by Standard Life Investments, the solely-owned investment subsidiary of Standard Life plc, while the remaining 40% is owned by the partners of SL Capital. They have amassed €5.3bn in total capital over the last 10 years and have an estimated $1.4bn of dry powder available to invest. Their largest fund, European Strategic Partners II, was raised back in 2002; the €1.1bn fund focused on buyout funds, secondary transactions and co-investments in Europe.
Jim McColl is one of the more outspoken people who voted in favour of an independent Scotland. He is the CEO of Clyde Blowers Capital, based in East Kilbride, just outside of Glasgow. Clyde Blowers Capital invests in companies that provide highly-engineered products and services into mission critical applications where there is a strong after-market potential and an opportunity for global development. The firm’s two funds have raised €787mn and recently rescued the ailing Ferguson Shipyard in Port Glasgow. The other three firms to make up the top five in terms of capital raised over the last 10 years are Dunedin, Scottish Equity Partners and F&C Private Equity.
Overall, the conclusive success of the ‘No vote’ alleviates most of the economic uncertainty that surrounded the referendum. A ‘Yes vote’ would have meant that fund managers established in Scotland would have had to navigate a different landscape than they have previously been accustomed to. For instance, they would not have been eligible for authorisation under the AIFMD, and would have had to conform to new tax rates and employment legislation, meaning that firms based or investing in the region would have needed to take some time in order to truly understand the consequences of an independent Scotland.