There has been an upturn in US and European investment into the UK in the first quarter of this year compared to the fourth quarter of last year, according to research firm Zephus Corporate Finance Knowledge.
Combined investment into the UK was £19bn (E30.8bn) in the first quarter compared to £12bn in the fourth quarter of last year. The research shows that larger sums are being invested in fewer transactions – there were 148 deals in the first quarter of this year compared to 209 in the fourth quarter of last year.
Ed Mountifield, research director at Zephus, said that superficially, the statistics indicate that M&A activity remains at high levels. “In reality, 2000 was a record year for inward investment into the UK at around £150bn, but the final quarter slumped dramatically as global stock markets reeled from the crash in technology stocks. I would be very surprised if inward investment levels into the UK this year match those of 2000 but, despite bearish global sentiment, this is a remarkably upbeat beginning to the year with several large acquisitions already posted.”
The value of US technology deals was 17 times higher, reaching £4.1bn from last quarter’s £243m. And European investment activity into the sector almost trebled, rising from £612m to £1.7bn, despite the number of deals having nearly halved.
European investment most notably increased in the communications sector where investment rose from £31m to £2.7bn. This increase was mainly due to media conglomerate Bertelsmann’s increased stake in RTL Group, a broadcasting and production company, valued at £2.67bn.
Despite the increased activity in the technology sector, the total value of US investment into the UK in the first quarter of this year increased by just £2bn. And the value of deals in all other key sectors dramatically decreased from the previous quarter. This compares to an increase of almost £5bn in European investments into the UK from the last quarter of 2000 to the first quarter of 2001.