Scotland ‘will miss buy-outs recovery’
LONDON: Private equity buy-outs will rebound in 2011 amid improving prospects for businesses, but the sector in Scotland will partly lose out through Holyrood's decision to ring-fence the NHS budget, a leading Scottish player claims.
Edinburgh-based F&C Private Equity said it expected a notable rise in deals next year because the recovery of corporate profits was now "much more visible" than at the start of 2010.
Hamish Mair, head of private equity funds at F&C, said the sector in Scotland had been "heavily constrained in 2009 when HBOS and Royal Bank of Scotland were effectively nationalised" and a number of foreign banks left the market.
"But there are signs that UK banks are looking at various asset classes again, and foreign banks, typified by an enhanced Santander are showing more interest in private equity," he said.
"Since the summer, in particular, confidence for buy-outs has been a lot better. There is a sector consensus that we are past the worst."
F&C believes there are obvious "bright spots" for the sector next year north of the Border - namely oil services and renewable energy.
But Mair said that while radical proposed changes in the NHS south of the Border would provide opportunities for private equity in the health field, this would not be the case in Scotland. "In Scotland the government has effectively ruled out reform by shackling the NHS - not only by ring-fencing its budget but by ludicrously guaranteeing no compulsory redundancies," he said.
"Adherence to these central planning principles means that Scotland will miss out on some of these innovations both from a patient improvement point of view and as an opportunity to create wealth." -PB News