That was the year that was

The year 2000 was a record year for private equity investment in the UK, says the BVCA, with £8bn invested and £9bn raised. Hi-tech investments soared, but MBOs fell.

UK private equity firms invested about £8bn last year, according to the BVCA's report on investment activity 2000. Much of the money went towards another record year for the UK’s hi-tech industry.

About £1.5bn was invested in hi-tech companies. Two-thirds of this money went into internet- and software-related companies. About £1.9bn of new capital was raised for future hi-tech investments.

According to the BVCA, the geographic spread of investment is also improving, with more than half the UK’s capital being invested outside London.

The Midlands received £1.5bn, twice the 1999 amount. Investment in London-based companies declined by 26 per cent to £1.76bn. However, investment in the Southeast increased by 68 per cent to £1.35bn.

UK private equity firms raised about £9bn in funds, £3bn more than in 1999.

Foreign investors were the biggest contributors for the second year running, accounting for 64 per cent of the capital raised, but their share was slightly down from 1999’s figure of 69 per cent. North American investors made up about two-thirds of foreign investment.

UK pension funds increased their allocations to private equity by 87 per cent on 1999 levels to £817m.

There was however an overall decrease value of MBOs, which declined by 22 per cent to £3.36bn invested in 26 per cent fewer companies. The value of management buy-ins fell by 21 per cent to £302m. The number of deals decreased by 25 per cent.

The report was compiled by PricewaterhouseCoopers from data provided by 96 per cent of the BVCA members.