The UK has consolidated its position as Europe’s largest private equity market by deal value in the face of challenging conditions.
Despite a year of political uncertainty, with a general election and ongoing confusion around Brexit, a slew of large deals meant that the UK recorded a small year-on-year increase in deal value against a backdrop of Europe’s other major economies falling off the record pace they set in 2018.
UK private equity was particularly strong in Q4 which accounted for more than half of 2019’s total value (£12.8 billion of £22.9 billion).
The UK’s overall success was driven by peer-to-peer transactions, which made up the four largest deals, with an aggregate value of £10.7 billion – almost half of the UK’s total for the year.
Christian Hess, private equity client group head at Investec, said: “The change in mix of capital deployment this year highlights the flexibility and agility of the private equity mandate of financial sponsors: public-to-private transactions have been a significant success story for the UK in 2019, bringing in huge pools of capital from global buyers.”
He added: “There are two factors behind this trend: on the one hand, public company valuations have declined, and in combination with a cheap pound, UK companies look attractive to global investors. On the other hand, traditional private equity processes such as auctions have become so competitive that buyers are more willing to look elsewhere for value.”