Escalation in Private Equity in response to potential sanctions and export‑control risk

Background:

One portfolio company within Foresight’s Private Equity portfolio is a specialist manufacturer and distributor of safety‑critical electronic components used in signal transmission between isolated circuits. Foresight invested in the business through a regional Private Equity fund in 2024 to support expansion into new markets and continued product development.

In early 2026, the company was referenced in national media following reports that a UK‑manufactured component was present within military equipment in a sanctioned jurisdiction. While there was no evidence of direct sales to sanctioned entities or regulatory breach, the issue indicated heightened sanctions, reputational and downstream‑use risk, triggering escalation. 

Objective:

To assess and mitigate potential sanctions, export‑control and reputational risks arising from downstream product use, and to ensure that the portfolio company’s governance, customer due‑diligence and escalation processes were sufficiently robust to prevent recurrence.

Stewardship Activity: 

Foresight immediately engaged with the company’s senior management to establish the facts, assess compliance with UK export controls and sanctions, and evaluate the adequacy of customer due‑diligence processes.

The company confirmed that the component had been sold in 2024 to a non‑sanctioned customer and subsequently resold multiple times without the company’s knowledge. Given the potential severity of the issue, Foresight escalated engagement and oversaw the following actions:

• Immediate cessation of sales and recall of the specific product from all customers, with refunds provided (total sales value <£10k); 
• Permanent discontinuation of the product and destruction of remaining stock; 
• Direct engagement with the distributor responsible for onward sale, who agreed to cease sales of that specific product to the customer; and
• Review of customer and supply‑chain due‑diligence processes, focusing on higher‑risk end‑uses. 

Outcome:

The escalation resulted in timely mitigation of potential sanctions and reputational risk and strengthened governance and compliance practices at the portfolio company. The case also informed wider portfolio oversight, with Foresight reinforcing expectations on customer due diligence, monitoring of higher‑risk jurisdictions and early escalation of similar issues across its Private Equity holdings.