Scot­land ‘will miss buy-outs re­cov­ery’

The Pak Banker - - Company& -

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

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