3i, Britain’s largest listed private equity group, is making plans to apply for ‘passporting’ rights in Luxembourg as senior management already assume a ‘hard’ Brexit, two people familiar with the move have said.
This means the FTSE 100-listed private equity firm believes the UK is unlikely to remain in the single market and it is taking steps to be able to market and distribute funds in the European Union.
Senior management are likely to make up their minds by the end of the year, the people said.
It comes as the buyout group said it is increasingly looking for European deals due to high valuations for assets in the UK market.
Frankfurt, Paris and Amsterdam are also in the running but a senior person has said Luxembourg is a ‘nose ahead’ of the two because 3i already has third-party funds administered out of the principality.
The company already has staff working in Luxembourg and it is familiar with the way of doing business there, the person said. The move would involve hiring new people outside the UK.
“[The company] is getting ready in the event of a hard Brexit. And that’s the smart thing to do in business: ‘hope for the best and prepare for the worst’,” the person who has direct knowledge of the move said.
The move follows the company’s full year results, which saw total returns of £1.6bn for its full financial year, an increase from £824m in 2016, aided by ‘very strong’ sales.
3i declined to comment.
Other alternative asset managers are looking to make similar moves, including Carlyle and Blackstone.