UK PE activity by wealthy individuals reaches 10-year high

Dealmaking by HNWIs almost doubled last year, according to research from UK law firm Boodle Hatfield.

UK private equity activity by high-net-worth individuals jumped to the largest amount in a decade last year, according to private wealth law firm Boodle Hatfield.

Wealthy individuals deployed £2.3 billion ($3.04 billion; €2.78 billion) in the UK in 2021, almost double the £1.2 billion total recorded in 2020, the London-based firm said in a statement.

Appetites were driven by historically low interest rates and opportunities related to Brexit and the pandemic, as well as a desire to access private equity returns without paying management fees or carry.

“We see HNWIs investing alongside PE houses, as well as undertaking club deals,” Kyra Motley, a partner at Boodle Hatfield, told Private Equity International. “That allows them to invest but avoid the cost of going through funds. We see that on a large scale.”

The UK enjoyed a record year for PE-backed deals in 2021, with £85.5 billion invested across 534 transactions between January and October alone, according to DC Advisory. Notable deals included the £6.8 billion acquisition of supermarket chain Asda by mid-market firm TDR Capital and UK-based entrepreneurs Mohsin and Zuber Issa.

UK HNWIs are not alone in developing bigger appetites for private equity. “It’s very popular in the Middle East, for example – they’re all getting involved in PE deals,” Motley said. “I think one of the reasons why even international families have looked more at PE in the UK is because UK-listed equities have… done okay, but PE has outperformed.”

Private wealth is becoming an increasingly important source of capital for private equity firms, as PEI explored in its February deep dive. The opportunity set is also expanding: according to Credit Suisse’s 2021 Global Wealth Report, 2020 was the first year in which more than 1 percent of adults globally were dollar millionaires. Unprecedented stock market gains and a volatile global economy drove a 6.3 percent increase in the world’s HNWI population that year, in addition to a 7.6 percent jump in the segment’s total wealth, per Capgemini’s World Wealth Report 2021.

“Europe has seen an exponential increase in first-generation entrepreneurs who have achieved major liquidity events,” Cyrus Shey, co-founder of Bregal Milestone, part of sixth-generation family foundation Bregal, told PEI at the time. “That capital is often being recycled into PE.”