Across the first half of 2024, just under a 10th of deals struck with UK firms involved a foreign investor
Foreign firms are buying the lion’s share in UK businesses, even as more private equity deals are being hammered out in Britain, fresh figures reveal.
Some £3.5bn was ploughed into UK enterprises through private equity from May to July, Barclays and Beauhurst’s figures show. This marks a 3% uptick from the preceding quarter.
Private equity is essentially when a fund invests in a company in return for a controlling share of that firm. Across the first half of 2024, just under a 10th of deals struck with UK firms involved a foreign investor.
However, these deals accounted for about 60% of the total amount invested over the period, the analysis found. It suggests that while UK investors are brokering the bulk of the deals, it’s the international investors who are bankrolling Britain’s most lucrative business ventures.
Barclays Private Bank’s private markets guru Shenal Kakad observed that “companies are staying private for longer”, which has spurred investors to dive into private equity for a wider array of prospects in recent times. “Historically the UK has been a major player in private market activity in Europe and we expect this trend to continue,” she added.
From May through July, the north west of England witnessed the steepest climb in equity funding, largely thanks to Cheshire’s RSK Group netting £500m from a consortium of funds. The UK’s private equity market is currently under the microscope, with greater attention as the Bank of England reviews the sector for its potential risks to financial stability.
This examination comes after the sector has seen rapid expansion, positioning itself as a primary source of funding for companies alongside traditional bank lending. Noteworthy is the ownership of major supermarkets like Asda and Morrisons by private equity firms, and the recent high-profile acquisition by US private equity firm Apollo Global Management, which took over British parcel delivery service Evri in a £2.7bn deal.
Moreover, Apollo made headlines last year when it acquired Wagamama through The Restaurant Group, and earlier this year, another American firm, Thoma Bravo, confirmed a £4.3bn agreement to privatise the UK’s cybersecurity specialist Darktrace.
Adding to the business landscape, Barclays research highlights that the number of registered companies in the UK reached approximately 5.4 million by July, marking an increase of around 300,000 from the previous year.
Hannah Bernard, the head of business banking at Barclays, interprets this uptick as an indication that businesses are “becoming more resilient, agile and adaptable to change”. This buoyancy aligns with the bolstering “wider support for strategically important industries like technology, advanced manufacturing and life sciences”, which Bernard suggests is a “recipe for growth”.
