General Atlantic CEO says higher taxes won’t hurt investments

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General Atlantic’s chief executive said higher capital gains taxation in the UK would not affect his company’s approach to investment and that deal-making would improve next year regardless of who won the US election.

Bill Ford, who heads the global private equity firm with $83 billion in assets under management, added that companies with market capitalizations above $10 billion will drive the IPO market in the future.

“Investors want more market capitalization,” Ford told the Financial Times Due Diligence conference in London, adding that small companies would struggle in the IPO market because “people want liquidity and it’s very difficult to generate enough liquidity when you are a smaller person. head and you are far from being included in an index”.

He added that the growth of the exchange-traded fund market was “negative for the IPO market” because “ETFs don’t buy IPOs, active investors buy IPOs.”

A drought in listings has persisted this year as interest rates have risen. Companies have raised about $26 billion by going public in New York this year, about the amount that was raised every six months in the years before the 2020-21 boom.

But Ford predicted that future big-ticket listings, such as the expected launch of Chinese fashion retailer Shein, could spark activity.

“It’s the kind of IPO that could excite investors and . . . reopen an IPO market.”

The drop in listings was part of a larger lack of deals that Ford has put on higher stakes and elections in the US and elsewhere in 2024.

But he said next year would be an “active year” once political uncertainty has eased and “the rate cycle has turned”. He added that “we are looking at a soft landing scenario”.

He said the prediction does not depend on who won the US election, although “everyone is hoping for a change in the antitrust environment. I know in the US, probably more broadly, that will allow strategic buyers to be more active. . . but I think it doesn’t matter who wins the election.”

Turning his attention to the taxation of carried interest – the share of profits private equity investors get to keep in successful deals – Ford said he did not know the UK changes would “dramatically change what we do or the style our to invest”.

Debates over the taxation of carried interest have long rippled through elections on both sides of the Atlantic.

UK Chancellor Rachel Reeves has notified the industry of her plans to close a “loophole” that has long allowed profits to be taxed as capital gains. However, the FT recently reported that it was seeking a compromise after several warnings that the rate hike could trigger an exodus of buyout executives.

“In the US the debate is, will it be equivalent to ordinary income and what will that rate be? You know, everybody in the world would like lower taxes or higher taxes (depending on political affiliation), but I don’t think it would change what we do,” Ford said.

“We need to deliver investment excellence for our clients to stay in business, we need to deliver the results they expect from us,” he added. “What motivates us more than taxes or anything else.”