UK deals hit 3-year low

The value of UK deals inked by private equity and venture firms last year fell below £20bn for the first time since 2005, according to preliminary data from the BVCA. The industry group says, however, that discounting the frothy 2006-2007 period, last year's numbers compare favourably with data for the decade as a whole.

Save for Scotland, UK investment levels dropped considerably in 2008, while fundraising levels fell universally, according to preliminary data released by the British Venture Capital Association.

“Private equity and venture capital firms are not immune to the effects of the recession and the decline in investment levels and fundraising is not unexpected,” Simon Walker, BVCA chief executive, said in a statement. “We are in for a period of uncertainty and continued difficulty, but by investing in ailing companies and saving jobs, backing the businesses of tomorrow and creating jobs, private equity and venture capital will be at the forefront of economic recovery.”

Private equity and venture capital firms are not immune to the effects of the recession.

Simon Walker

UK deals done by private equity and venture capital firms totalled £19.5 billion in 2008, down from £31.6 billion in 2007 and £21.8 billion in 2006.  All regions also experienced falling investment levels compared to 2007, except for Scotland, which saw £1.1bn invested in 2008 compared to £393 million in 2007. 

Despite the evident slowdown, the BVCA noted that “in comparison with the decade as a whole, rather than the exceptional 2006-2007 period, investment in 2008 was robust”. Last year's total invested is equivalent to the total invested in 2004 and 2005 combined. And it surpasses the total £18 billion invested between 2001 and 2003.

Fundraising levels, meanwhile, dropped nearly 21 percent year-over-year to £23.1 billion raised last year (not including any reduced commitments to funds that had already formally closed). That is a drop of nearly 33 percent since the record £34.3 billion raised in 2006.