Total value of private equity deals in North West surges to £5bn in last 12 months
The number of private equity deals in the North West hit the £5bn mark last year.
The research from KPMG came as private equity deal volumes across the UK fell to their lowest levels in recent years.
The latest study of North West private equity transactions found that 68 deals were completed in 2019 at mid-market level, marginally higher than the previous 12 months (66 deals).
However, aggregate deal value in the region leapt by nearly a quarter (23%) to £5bn, up from £4.1bn.
The North West is now the most active and largest private equity market in the UK outside of London where 207 deals worth £14.6bn were completed.
A total of 978 deals completed were completed in the UK last year with a combined value of £86.5bn.
This was the fewest number of private equity transactions seen in the UK since 2014, and a fall of 19% on the previous year, which saw 1,207 deals worth £106.6bn.
The UK mid-market saw a decline in deal volumes, recording 532 deals in 2019 compared to 623 in 2018, albeit the combined value of these deals increased from £38.3bn to £39.9bn.
Rick Stark, head of private equity in the North at KPMG, said: “The North West is the second largest region for private equity – not just in the UK, but in Europe.
“It performed well against the backdrop of a national market that somewhat stuttered in 2019 following persistent uncertainty around Brexit, coupled with broader geopolitical turmoil.
“The mid-market, which has been the stand-out area of UK private equity, has driven a consistent level of activity in the North West in recent years.
“Yet, despite the consistent volume of deals involving North West companies, the imbalance between demand from private equity to deploy capital and the number of opportunities to invest in buyout deals in high quality assets remains an on-going dynamic.
“One of the consequences of this lack of supply has been a continued skew of activity towards bolt-on acquisitions for portfolio companies, which made up more than half of deals nationally.”
Rick Stark added: “The fundamentals of private equity remain strong. The investor community is bringing more funds to the table and is evolving and flexing their investment styles to deploy capital across different parts of the market and adapt to the competitive environment.
“In fact, the only real constraint on dealmaking is the relative scarcity of high-quality, well-run, resilient businesses with sufficient opportunity to create or add value.
“Now, after a long period clouded by so much uncertainty, there is at least some clarity on the political environment and the early signs are there that this may stimulate a resurgence of private equity-related activity across the country – at least in the short to medium term.”
