Investment by member firms of the British Private Equity and Venture Capital Association exhibited an underlying increase of more than one-third in 2007 despite the turbulent conditions caused by the credit crunch in the second half of the year, according to the association’s 2007 Report on Investment Activity published in conjunction with PricewaterhouseCoopers, according to the Private Equity Wire.
Total investment by member firms, which includes the vast majority of private equity and venture capital assets managed in the UK, was up by 45%, from GBP21.9bn to GBP31.6bn, although this partly reflected an increase in BVCA membership from 192 to 214 member firms during the year. Adjusting for this, the underlying increase was 37%.
Activity was split equally between the first and second halves of the year and investments were made in a total of 1,680 companies, compared with 1,630 in 2006 and 1,535 the year before.
Investment in UK companies continued to increase last year, from GBP10bn in 2006 to GBP12bn in 2007, but the inclusion of new BVCA members, including several large buyout houses, meant that investment in continental European companies increased at a faster rate, from GBP10bn to GBP14bn.
“The latest figures demonstrate that the UK is increasingly the gateway to the whole of Europe and the most important centre for the private equity industry outside the US,” says Simon Walker, chief executive, BVCA.
“This reflects the depth of knowledge built up over decades, an attractive regulatory environment and unparalleled access to capital. It is essential that we preserve our advantages and that nothing is done to threaten the favourable regulatory environment,” adds Walker.
“Buyout activity increasingly dominates the investment landscape. Management buyout and management buy-in deals attracted the greatest proportion of overseas investment, GBP14.8bn or 75% of the total, compared with GBP7.5bn or 66% of the total in 2006,” says Ashley Coups, director, PricewaterhouseCoopers. Management buyouts and buy-ins were also the dominant trend in the UK, with GBP7.7bn, 64% of total assets.
Total investment in expansion deals rose from GBP6.6bn in 2006 to GBP8.4bn last year, while the total number of early-stage venture capital deals rose from 578 to 584 companies, despite a fall in investment from GBP1.3bn in 2006 to GBP683 million.
BVCA members raised GBP29.3bn in independent funds in 2007, compared with GBP34.3bn in 2006 and GBP27.3bn the year before. The UK provided the second largest investor total with GBP7.3bn, behind North America’s GBP12.2bn.