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UK private equity investment at highest level for five years

New research from KPMG has revealed that private equity investment, both in terms of value and number of deals, has reached levels not seen since 2017 in the first half of 2021. 

A total of 785 deals were completed for an overall value of GBP73.7 billion pounds after factors such as the vaccine rollout and loosening restrictions increased optimism, while the depressed values of UK companies further fuelled demand for deals. 

With optimism among business leaders continuing to rise and several high value deals going through in July and the start of August, this record investment looks set to continue, with this in mind, investment specialists IW Capital has commissioned national research to determine the sectors investors are looking to back. 

The data indicates that sectors in green and sustainable fields are set to benefit from significant investment backing in the next year while firms in more scientific fields, who have enjoyed increased exposure over the last year and a half, are also set to benefit. It also suggests that hospitality and the creative industries, perhaps worst affected by the economic impacts of the pandemic, are firmly on the radar of UK investors. 

• 45 per cent of UK investors are looking to back green or sustainable companies in the next year
• 36 per cent of UK investors are looking to invest in stocks and shares in the next year
• 34 per cent of UK investors are looking to invest in the Biotech, Meditech & Pharma industries in the next year
• 29 per cent of UK investors are looking to back online retail businesses in the next year
• 26 per cent of UK investors are looking invest in Fintech in the next year
• 18 per cent of UK investors are looking to invest into the creative industries in the next year
• 16 per cent of UK investors are looking to back businesses in the hospitality sector in the next year

Luke Davis, CEO of IW Capital, says: “Investment confidence is often a barometer for the future of the economy and wider business sentiment so it is great to see that private equity is putting its money where its mouth is in terms of backing UK firms. This is a trend that has also been reflected in the desire of investors to support and invest in, small, private, growth companies. In our experience many firms are looking for growth, and the investors we work with are keen to back them in their goals after a tough year for businesses of all kinds. 

“Our research also gives us an idea of where the most demand exists and unsurprisingly given the increasing concern and coverage around climate change, green and sustainable companies top the list for investor demand. There is, however, also significant confidence in the sectors that suffered most during periods of lockdown and nearly a fifth of investors look to back the hospitality sector or the creative industries.

“The following year or so will be crucial for UK economic growth and SMEs and entrepreneurs will be key to that given that they make up 99.9 per cent of private sectors businesses and employ nearly 60 per cent of the workforce. The investment community that backs these firms will, therefore, be equally important so it is hugely encouraging to see this optimism and activity.”

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