This wasn't supposed to happen. In the main conference room at the Westin Grand in Munich, more than 70 percent of delegates on day one expressed the view that the UK would vote to remain part of the EU. When day two dawned, the UK had voted out.
“Very surprised and a bit disappointed,” was an official view expressed by Paul Shea of Beechbrook Capital. In private, rather more emotional language was being used by others.
Nicole Waibel of Crescent Capital Europe pointed out that the UK makes up around 43 percent of deal flow in the European private debt market so what happens there is highly significant. She said her firm had been busy preparing a note to investors about the vote outcome, the next political steps, the effects on the portfolio and the way forward.
“Most of the disappointment is about the amount of uncertainty it will create,” said Shea, before adding: “These things are sent to challenge us.”
Chris Gardner of Dechert said uncertainty was sure to last for the duration of the discussions around Article 50 of the Lisbon Treaty, which is expected to take two years. He said some of the recent EU treaties had taken longer to put together than the earlier ones and that this could lead to years of interim measures.
Specifically on the UK market Waibel pointed out that many UK businesses are very UK-centric because they are mainly outsourcing and services businesses rather than manufacturing.
On this theme, Shea provoked laughter – a good achievement in the circumstances – when he referred to Beechbrook's backing of a trampolining company and said that given the English rain, nothing would prevent £8 being spent to bounce on an indoor trampoline – no matter about Brexit.
On a more serious, but also optimistic, note, he said there was stable deal flow in the mid-market, strong fundamentals and that long-term investors can plot their way through short term difficulties.
“I think there could be some very interesting opportunities in the UK over the next three to five years,” he added.