Private Equity Investment

The industry is a major player in the global economy, with over £1 trillion in assets under management by private equity UK companies.

• The growth of the mid-market sector. Mid-market firms are increasingly investing in companies with a value of between £100 million and £1 billion. This is due to the increasing availability of capital for this sector, as well as the growing opportunities for growth and acquisition in mid-market businesses.

  
  

  
  

• The rise of technology-focused investments. Technology businesses are increasingly attractive to firms, due to their high growth potential and strong competitive positions. In 2022, technology businesses accounted for 25% of all deals in the UK.

  
  

• The increasing focus on ESG investing. Firms are increasingly taking environmental, social, and governance (ESG) factors into account when making investment decisions. This is due to the growing demand from investors for ESG-focused investments, as well as the recognition by firms that ESG factors can have a positive impact on the long-term performance of their investments.

  
  

Other Hot Trends in the Industry right now are;

• The rise of alternative investments: Investors are increasingly looking to diversify their portfolios by investing in asset classes such as venture capital and private debt. This has led to a greater focus on the mid-market, as well as on businesses that are not traditional targets for PE, such as family-owned businesses and social enterprises.

  
  

• The increasing importance of data and analytics: Firms are using data and analytics to make better investment decisions. This includes using data to identify potential targets, assess their performance, and manage risk.

  
  

  
  

• The growth of the digital economy: The digital economy is one of the most dynamic sectors of the global economy, and firms are increasingly investing in digital businesses. This includes businesses in the technology, media, and telecommunications sectors.

The economic consequences of COVID-19: The COVID-19 pandemic has had a significant impact on the global economy and the UK is no exception. This has led to a slowdown in economic growth and a decline in corporate profits, which has made it more difficult for irms to find attractive investment opportunities as original documented here.

• Increased regulation: The UK government is increasing regulation of the industry. This is intended to protect investors and to ensure that Private Equity firms are operating in a responsible manner. However, it could also make it more difficult for PE firms to operate and could lead to a decline in the number of deals being done.

  
  

  
  

• Rising interest rates: Interest rates are rising in the UK, which is making it more expensive for PE firms to borrow money. This could make it more difficult for them to finance their investments and could also lead to a decline in the value of their assets, as first reported in our private equity news uk challenges of 2023 article.

  
  

  
  

• Changing investor preferences: Investors are increasingly demanding that PE firms focus on environmental, social, and governance (ESG) factors. This is putting pressure on firms to change their investment strategies and to focus on investments that are aligned with ESG goals.

Despite these challenges, the industry is still expected to grow in 2023. However, the growth is likely to be slower than in previous years.

• Focus on ESG investing: As investors increasingly demand that firms focus on ESG factors, firms that are able to demonstrate their commitment to ESG will be well-positioned to attract capital.

  
  

• Be more transparent: firms need to be more transparent with their investors about their investment strategies and their ESG goals. This will help to build trust with investors and will make it more likely that they will continue to invest in PE.

  
  

• Adapt to the changing regulatory environment: PE firms need to adapt their strategies to the changing regulatory environment. This includes complying with new regulations and developing new ways to manage risk.

  
  

• Focus on long-term value creation: Firms need to focus on creating long-term value for their investors. This means investing in businesses that have the potential to grow and to generate sustainable profits.

  
  

By focusing on ESG investing, being more transparent, adapting to the regulatory environment and focusing on long-term value creation, firms can overcome these challenges and continue to grow in the years to come.

Here are some of the biggest raises in private equity in Europe in 2023

EQT

EQT, a Swedish private equity firm, raised €10 billion for its latest fund, EQT IX. This is the largest private equity fund ever raised in Europe.

Bridgepoint

Bridgepoint, a British private equity firm, raised €7.5 billion for its latest fund, Bridgepoint VIII. This is the largest private equity fund ever raised in the UK.

CVC Capital Partners

CVC Capital Partners, a global private equity firm, raised €6.5 billion for its latest fund, CVC Capital Partners VIII. This is the largest private equity fund ever raised in Europe by a single manager.

KKR

KKR, a global private equity firm, raised €5.5 billion for its latest fund, KKR European Growth Fund II. This is the largest private equity fund ever raised in Europe by a single manager for a growth-focused strategy.

Hellman & Friedman

Hellman & Friedman, a global private equity firm, raised €4.5 billion for its latest fund, Hellman & Friedman Europe VII. This is the largest private equity fund ever raised in Europe by a single manager for a buyout strategy.

These raises highlight the continued strength of the private equity industry in Europe and the industry is now worth over €1 trillion, and it is expected to continue to grow in the years to come.

Recent Big Deals in European Private Equity

The European private equity industry has seen a number of big deals in recent months.

These deals highlight the continued growth of the industry and the increasing appetite for private equity investments.

Merlin by Blackstone

One of the biggest deals was the acquisition of Merlin Entertainments by Blackstone for £5.3 billion. Merlin is a British leisure company that owns a number of theme parks, attractions, and hotels.

The deal was seen as a major coup for Blackstone, as Merlin is one of the leading leisure companies in the world.

BTG by CVC

Another big deal was the acquisition of BTG Pactual by CVC Capital Partners for €10.1 billion. BTG Pactual is a Brazilian investment bank.

The deal was seen as a major step for CVC, as it expands its presence in Latin America.

In addition to these two big deals, there have been a number of other notable transactions in the European private equity market.

These include the acquisition of ABN Amro's private banking arm by Warburg Pincus for €1.6 billion, the acquisition of CVC Capital Partners' German business by Advent International for €7.5 billion, and the acquisition of Hellman & Friedman's European business by TPG Capital for €9.5 billion.

These deals highlight the continued growth of the European private equity industry.

The Private Equity UK and international industry has seen a number of new developments in July 2023.

Here are some of the highlights:

• KKR Mulls $1bn Sale of NVC Lighting Stake: KKR is reportedly considering a sale of its stake in NVC Lighting, a Dutch lighting company. The stake is valued at around $1bn.

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The potential sale of NVC Lighting's China-based business comes at a time when the global lighting market is undergoing a number of changes. The rise of LED technology is driving growth in the market, but this is also leading to consolidation as smaller players are unable to compete. KKR's decision to consider a sale of its stake in NVC Lighting could be seen as a sign that the firm believes the market is ripe for consolidation.

The potential sale of NVC Lighting's China-based business is also likely to be of interest to other private equity firms. The lighting market is a large and growing market, and there is a lot of potential for value creation in this sector. A number of private equity firms have been active in the lighting market in recent years, and it is likely that there will be a lot of interest in NVC Lighting if KKR decides to sell its stake.

The potential sale of NVC Lighting's China-based business is a significant development in the global lighting market. It remains to be seen whether KKR will decide to sell its stake, but if it does, it is likely to spark a bidding war between other private equity firms.

• Blackstone, TPG Eyeing $1.7bn Deal for US Fund Administrator Standish: Blackstone and TPG are reportedly in talks to acquire Standish, a US fund administrator. The deal is valued at around $1.7bn.

Standish is a leading provider of fund administration services, with over $1.5 trillion in assets under administration.

The acquisition of Standish would give Blackstone and TPG a major foothold in the growing fund administration market. Blackstone and TPG are two of the largest private equity firms in the world, and they have a strong track record of acquiring and growing businesses. The acquisition of Standish would be a significant addition to Blackstone and TPG's portfolio of businesses.

The deal is still in the early stages, and it is not yet clear whether it will be completed. However, if the deal is completed, it would be a major acquisition in the fund administration market.

• Audax Closes Two New Funds: Audax has closed two new funds, Audax Fund VII and Audax Origins Fund I. The funds raised a combined total of $7.8bn.

  
  

• Firms Eye Smaller Targets: PE firms are increasingly looking to acquire smaller targets, as they become more difficult to find larger deals.

  
  

• ESG Investing Gains Momentum: ESG investing is gaining momentum in the UK PE industry, as investors seek to invest in sustainable businesses.

Private Equity Investment in the UK

The private equity industry in the UK is one of the largest and most active in the world.

In 2022, UK-managed private equity and venture capital funds raised £70.2 billion, and invested £27.5 billion in UK companies.

The industry employs more than 9,300 people, of which 6,100 are highly-skilled professionals (investment, portfolio and finance teams).

The UK private equity industry is made up of a wide range of firms, from large global firms to small, specialist firms.

The industry is also home to a number of leading venture capital firms, which invest in early-stage companies with high growth potential.

The UK private equity industry has a long and successful history.

The first private equity firm in the UK was founded in 1927, and the industry has grown rapidly in recent years. The UK is now home to some of the most successful private equity firms in the world, such as Apax Partners, Bridgepoint Capital, and CVC Capital Partners.

The UK private equity industry is a major driver of economic growth in the UK.

The industry invests in a wide range of sectors, including technology, healthcare, financial services, and manufacturing. The industry also creates jobs and helps to boost productivity.

The UK private equity industry is facing a number of challenges in the years to come.

The global economic slowdown is likely to have an impact on the industry, as is the increasing regulation of the industry.

However, the UK private equity industry is well-positioned to overcome these challenges and continue to grow in the years to come.

The UK private equity industry is facing a number of challenges in the coming years, but there are also some significant opportunities.

One of the biggest challenges is the rising cost of debt. As interest rates continue to rise, it will become more expensive for private equity firms to borrow money to finance their investments. This could lead to a decline in deal activity, as fewer companies will be able to afford to be taken private.

Another challenge is the increasing scrutiny of private equity firms by regulators.

In recent years, there have been a number of high-profile cases of private equity firms engaging in unethical or illegal behavior. This has led to increased scrutiny from regulators, who are looking to ensure that private equity firms are operating in a responsible manner.

However, there are also some significant opportunities for the UK private equity industry in the coming years.

One of the biggest opportunities is the growth of the digital economy. The UK is a leading player in the digital economy, and there are a number of promising startups and growth companies in this sector. Private equity firms could play a key role in helping these companies to scale and grow.

Another opportunity is the growing focus on ESG investing.

ESG investing is an investment strategy that takes into account environmental, social, and governance factors.

This is becoming increasingly important to investors, and private equity firms that can demonstrate that they are investing in a sustainable and responsible manner will be well-positioned for the future.

Overall, the future of the UK private equity industry is uncertain.

There are a number of challenges that the industry will need to overcome, but there are also some significant opportunities. The industry that emerges in the coming years will be one that is more responsible, more sustainable, and more focused on long-term value creation.

The growth of impact investing: Impact investing is a type of ESG investing that focuses on generating both financial and social returns. This is a growing trend in the private equity industry, and private equity firms that can demonstrate that they are creating positive social impact will be well-positioned for the future.

The future of the UK private equity industry is uncertain, but there are some significant opportunities for the industry to grow and thrive.

By adapting to the changing landscape and focusing on sustainable and responsible investing, private equity firms can position themselves for success in the years to come.