His opinion? A second vote is the "only solution."
“It’s difficult for an American to come to Europe and tell Europeans how to run their country because we haven’t run ours perfectly. So it’s hard for me to give advice to people in England.” Rubenstein told attendees, per the Financial Times. “But I do think that the only solution that I can see that would make sense to resolve this problem is a re-vote. The first vote was—you could say—not relatively informed because it wasn’t clear what Brexit really meant. Now it is clear.”
Rubenstein's buyout shop has joined a growing number of private equity firms that have scaled back investments in the UK. Last year, private equity deal value dropped a whopping 27.7% in the UK, while the rest of Europe dipped 5.9%, according to PitchBook's 2018 Annual European PE Breakdown. Private equity deal count took a hit in the UK as well, dropping 9.5%.
It's not just the UK that would be affected, either, per PitchBook analyst Wylie Fernyhough, who called Brexit a "lose-lose situation" from a financial markets perspective.
From the report:
"Any ramifications are likely to have spillover effects in continental Europe, because more capital flows from the UK to the rest of Europe than the other way around. In fact, Europe has a $90 billion annual trade deficit with the UK. Moreover, UK investors invested in £16.6 billion (€18.8 billion) worth of PE deals in Europe in 2018 against the £7.1 billion (€8.0 billion) that European investors closed in the UK. With many of the major European economies looking fragile, including [Germany's], a hard Brexit may be enough to throw the whole region into recession.
UK prime minister Theresa May has been unable to renegotiate her exit deal with the EU so far—and the pressure is mounting. Earlier this week, she proposed a series of parliamentary votes on the possibility of a revised Brexit deal, a no-deal exit or delaying the March 29 Brexit date altogether.
In the meantime, don't be surprised if many private equity firms stay away from UK deals as the drama continues. Carlyle, for instance, has made just one UK-based PE deal so far this year after striking 16 in 2018, per PitchBook data.
“I think for the time being we are going to partially move forward in a really uncertain way," Rubenstein said, per the FT. "I think that’s really going to hurt UK growth and it will hurt UK property values and really hurt the European economy.”
To download our full 2018 Annual European PE Breakdown, click here.