BVCA reports increasing confidence

UK private equity firms are increasingly confident that the overall business climate is recovering, according to a British Venture Capital Association (BVCA) survey.

The latest BVCA study has found increasing bullishness emanating from its members regarding the economic outlook. 

The quarterly ‘Confidence and Attitudes’ survey reveals that almost half those canvassed (44 per cent) found the business environment favourable for investment over the last three months. In June 2003, only 28 per cent had found the previous three months favourable.

Looking ahead, 50 per cent are confident of an improvement in the next quarter. This compares with equivalent figures of 37 per cent at June 2003 and 14 per cent at March 2003. For the first time this year, none of the respondents are predicting a decline in conditions.

Said John Mackie, chief executive of the BVCA: “It is very encouraging to see this increase in investor confidence. Ninety per cent of our members expect their investment activity to increase or remain stable over the next three months, which is a very positive indicator.”

The fundraising environment, though, has shown no sign of improvement. Looking back over the quarter, 76 per cent of respondents said fundraising had been very or fairly unfavourable, while just seven per cent said it had been very or fairly favourable. However, only one per cent are expecting a further decline in the next quarter, while 77 per cent think there will be no change and 22 per cent expect an improvement.

Forty six per cent of respondents said they expected the health of their portfolio companies to improve in the next three months, while 50 per cent thought they would remain the same and 4 per cent are anticipating a decline.

The survey was conducted by YouGov among nearly half of the BVCA’s member companies. The BVCA has 163 full member firms.