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The State of UK Private Equity: Investment in UK Companies by UK-based Fund Managers – April 2014

by Jonathan Parker

  • 16 Apr 2014
  • PE

Since 2006, almost 1,700 UK companies have received investment from a UK-based private equity firm, with many receiving repeat investments. Having completed just under 1,900 deals at a total value of more than $160bn, UK-based fund managers have been involved in 73% of the 2,567 private equity investments into UK companies. As with the wider private equity industry, activity peaked in 2007, with 285 deals valued at $43.7bn. Consecutive falls in both number and value saw 2009 record just 125 investments in UK companies by UK fund managers, valued at $5.7bn. This was followed by a sharp recovery in number, with 256 investments in 2011, alongside an increase in the aggregate value of deals – although this remained significantly below the 2007 peak, with $13bn in 2011. The number and aggregate value of deals last year stood 12% and 7% lower, respectively, than in 2011. 

The consumer & retail industry has been the largest beneficiary of private equity investment, with 409 investments valued at a total of $39.3bn, while companies operating in the business services sector have also seen high volumes of investment, with 364 deals valued at over $22bn since 2006. The industrials sector, which includes manufacturing, transportation and other such companies and is consistently the biggest focus for private equity investment worldwide, saw 339 deals with an aggregate value of $15.1bn. Telecoms & media was the only industry to see any significant increase overall between 2011 and 2013, with 2.5x as many deals in this sector last year compared to 2011. 

Leveraged buyouts have constituted 54% of the number of investments in the UK by UK-based private equity firms, with add-on investments accounting for around 25% and investments in public companies comprising 3% of all deals since 2006. In terms of value, the number of deals valued at less than $100mn was higher than for any other value band, with 71% of all UK investments by UK fund managers falling into this category. Twenty-three percent of investments were valued in the $100mn to $499mn range, with 4% valued at between $500mn and $999mn. It is interesting to note that across the period 2006 to present, the number of deals valued at less than $100mn (as a proportion of all deals) did not peak until 2012, despite the global fall in private equity investment in 2009 following the onset of the financial crisis. 

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