Preqin currently tracks 1,184 investors that have previously committed to funds focusing on opportunities in the UK. Geographically, 51% of the LPs that have previously invested in funds focusing on the UK are based in North America, 42% are located within Europe and the remaining 7% are based in economies or regions outside of North America and Europe. Investors located within the UK make up 20% of LPs that have an appetite for the region.
In terms of the types of investors interested in the UK, public pension funds account for the highest proportion (19%) of the number of overall investors in UK-focused private equity vehicles. Private sector pension funds make up 17% of these investors, followed by fund of funds managers, which represent 13%. Foundations represent 11% of the LPs known to have previously invested in the UK, while endowments account for 10%.
Investors based within the UK also represent a significant source of capital within the private equity industry. Preqin currently tracks 392 LPs that are based within the UK, managing an aggregate $9.2tn in total assets. UK-based investors (excluding fund of funds managers) have an average current allocation to private equity of 9.8% of total assets, with an average target allocation of 8.9%.
When looking at the investment preferences of LPs based in the UK, venture capital funds are the most attractive to investors located in the country, with 53% of such investors having an appetite for this type of fund. This is followed closely by buyout funds, with 52% of UK-based investors having an interest in this fund type. Fund of funds vehicles account for 44% of tracked UK-based investors, allowing investors to hold a diversified portfolio of investments and gain access to various geographical regions, as well as niche markets.
With fundraising remaining challenging, UK-based investors, with capital available to invest, look likely to remain an important source of capital for the private equity asset class.