Private Equity investment continues to soar
2019 was another strong year across the Private Equity investment markets.
There were record levels of capital deployed across the UK and a significant contribution made by overseas investors who have been drawn to the quality assets available on UK shores, but also by favourable exchange rates.
Whilst deal values peaked, deal volumes have shown some contraction when compared to 2018 with an underlying implication that Private Equity are now leaning toward larger investments for longer standing and more mature businesses. This trend does pose a concern, with a high number of early stage owner managed businesses in the UK struggling to locate suitable funding partners.
Technology based and ‘technology enabled’ businesses are frequently the centre of attention, with Fintech and AI being the major point of focus in Private Equity circles at present. Fintech alone, defined as any business providing a technology based product/service for the banking and financial services markets, saw over £37 billion of investment in the UK which was a 91% increase on 2018 and contributed 83% of all Fintech investment across Europe.
Looking into 2020 and beyond, there is an expectation that a softening of the UK economic landscape may lead to further growth in the Private Equity markets, with record levels of capital on hand. In the short term, the Budget and Brexit transitions, along with the outbreak of the coronavirus, will need to be monitored. All three factors will impact the appetite and ability for Private Equity to sustain current momentum.
The birth of new Fund Managers carrying private capital that does not fall under the VCT umbrella will be key to stimulating smaller profile investments, with these funds operating without some of the restrictions of their VCT counterparts.
We are particularly active in this space and would welcome conversation with any business, fund manager or adviser who is considering an equity raise.