The British Venture Capital Association’s (BVCA) Report on Investment Activity 2004 found a 52 percent rise in total private equity investment in the UK from £6.4 billion (€9.4 billion; $12.0 billion) in 2003 to £9.7 billion in 2004.
The survey, conducted amongst all members of the BVCA, found that firms are taking an increasingly global stance. Investment abroad reached £4.3 billion in 2004 compared with £2.3 billion the previous year, with the number of overseas companies financed increasing 21 percent to 265. Investment in continental Europe more than doubled to £3.9 billion from £1.9 billion the year before.
The total amount invested in UK management buyouts increased 58 percent from 2003-04, from £2.4 billion to £3.8 billion. The number of companies financed through buyouts increased over the period from 168 to 237, meaning that the average MBO financing was £15.9 million last year, compared with £14.3 million the year before.
The BVCA also issued its annual Performance Measurement Survey, which showed private equity outperforming total UK pension fund assets and the principal stock market indices over three, five and ten year periods.
A survey of BVCA members showed net returns generated by private equity were 14.8 percent over ten years; 9.4 percent over five years; and 11.5 percent over three years.
The strongest performance in UK private equity fund categories came from mid-MBO funds.
Early-stage and technology funds demonstrated a positive return in 2004 for the first time in four years though their three, five and ten year returns remain in negative territory.
“The performance figures again confirm private equity as an asset class offers consistently superior performance over the long term,” said John Mackie, BVCA chief executive.