The financial services industry is a key driver of economic growth in the UK and London is arguably the world’s pre-eminent financial centre, providing a global hub for international insti
The financial services industry is a key driver of economic growth in the UK and London is arguably the world’s pre-eminent financial centre, providing a global hub for international institutions, firms and investors, according to a survey of the economic impact of the private equity industry commissioned by the British Venture Capital and Private Equity Association.
The study, which seeks to rebut negative public impressions of private equity, says it plays a key role in the success of the UK financial sector and accounts for a significant share of the overall benefit provided to the UK economy by the financial services industry as a whole.
During 2006, financial and professional services firms generated an estimated GBP5.4bn in revenue through the provision of services to the private equity community, representing around 12 per cent of the total annual turnover of the UK financial services industry.
The private equity industry directly employs more than 9,300 people in the UK, the BVCA says, including more than 6,100 highly skilled professionals. For every private equity investment executive investing directly in UK companies, 2.2 full-time equivalent supporting executives are providing specialist advice and financial services.
Including the financial, professional and business services sectors, close to 15,400 professionals at more than 1,500 firms are engaged either directly or indirectly in private equity-related activities, the study argues.
Following two decades of strong growth, the UK private equity industry is an increasingly significant revenue generator within the financial and professional services industries, the BVCA says. The private equity markets is second globally only to the US, and the number of investors has grown more than threefold industry over the past two decades.
The value of equity invested in unquoted businesses by UK private equity and venture capital firms reach almost GBP22bn in 2006. Over the past six years, private equity and venture capital funds have raised more than GBP95bn of capital for investment in unquoted businesses.
UK private equity fund managers have long attracted capital investment from abroad, the study finds, with an annual average of more GBP11bn of funding flowing into UK funds from over the past six years. At nearly GBP70bn in foreign investment, this represents more than 70 per cent of the total capital raised by the UK private equity industry over this period.
Nearly 50 per cent of the total capital invested by UK private equity and venture capital firms over the past six years has been committed to companies within the UK, the BVCA says, resulting in a positive net inflow of capital into the UK economy.
