Overseas investment makes up 70% of UK industry

The near £11 billion per annum investment from overseas has contributed to the boom in the UK financial services industry, spurred on by cheques from private equity firms amounting to almost £580,000 per adviser.

More than 70 percent of investment in UK private equity has been from overseas, according to a report by the British Private Equity and Venture Capital Association.

Simon Walker:
PE mainstream

More than £11 billion ($21.4 billion; €14.8 billion) has been annually invested in UK funds from overseas during the six years from 2001 to 2006, the report said. Of this, nearly 50 percent was invested in the UK. The private equity industry has raised more than £95 billion in this period.

BVCA chief executive Simon Walker said: “[The report] confirms something that many of us have known for some time: we are part of the economic mainstream. In these uncertain economic times private equity has, more than ever, a critically important role to play in making the economy more productive and helping to stimulate economic growth.”

The BVCA will be hoping the report will help convince the industry’s vocal critics in politics, across the unions and in the media that private equity has a positive effect on the UK economy.

Private equity firms generated £5.4 billion of fee income for the UK financial services industry or 12 percent of the total 2006 annual turnover. This is equivalent to £580,000 per executive working on private equity related mandates.

Of this sum, 77 percent was generated by corporate finance and accounting firms, banks, finance providers and law firms. Around £1 billion of these fees were received outside London.
The industry directly employs 9,300 people and indirectly employs nearly 15,400 highly skilled professionals across more than 1,500 companies. It invested £22 billion in 2006, of which more than £5.9 billion was deployed outside London.

From 2003 to 2006 private equity provided nearly 40 percent of UK investment banking revenue from loan financing and related services, accounting for an average 20 percent per annum of the total UK mergers and acquisitions market.