Private Equity - United Kingdom

United Kingdom

The deal value in the Private Equity market is projected to reach €101.70bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2025) of 6.49% resulting in a projected total amount of €108.30bn by 2025.
The average size per deal in the Private Equity market amounts to €97.71m in 2024.
From a global comparison perspective it is shown that the highest deal value is reached in the United States (€550,900.00m in 2024).
In the Private Equity market, the number of deals is expected to amount to 1.34k by 2025.

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Analyst Opinion

The Private Equity market in the United Kingdom is currently facing a mild decline, impacted by economic uncertainties, regulatory changes, and heightened competition. These factors have contributed to a cautious investment environment, affecting overall market performance.

Customer preferences: Investors in the Private Equity market in the United Kingdom are adapting to shifting consumer preferences towards sustainability and ethical investing. There's a rising demand for companies that prioritize environmental, social, and governance (ESG) criteria, reflecting heightened awareness of climate change and social issues among consumers. This shift is prompting Private Equity firms to focus on investments in sustainable technologies and businesses that promote social equity, influencing deal structures and long-term value strategies in the market.

Trends in the market: In the United Kingdom, the Private Equity market is experiencing a significant shift towards sustainable investing, with firms increasingly prioritizing Environmental, Social, and Governance (ESG) factors in their investment strategies. As consumers demand greater accountability from businesses, Private Equity firms are focusing on sectors like renewable energy and social enterprises. This trend not only shapes investment opportunities but also alters due diligence processes and valuation models, compelling stakeholders to adapt to a landscape where long-term sustainability could dictate future success and returns.

Local special circumstances: In the United Kingdom, the Private Equity market is uniquely shaped by its strong regulatory framework and cultural emphasis on corporate responsibility. The Financial Conduct Authority (FCA) has implemented stringent guidelines that encourage transparency and accountability, pushing firms to adopt sustainable practices. Additionally, the UK's rich history of social entrepreneurship fosters an environment where impact investing is on the rise. This cultural focus on sustainability not only attracts investors but also drives the demand for innovative solutions in sectors such as renewable energy and affordable housing.

Underlying macroeconomic factors: The Private Equity market in the United Kingdom is significantly influenced by macroeconomic factors such as central bank policies, particularly interest rates. The Bank of England’s monetary policy, including decisions on interest rates, plays a crucial role in shaping investment strategies within the market. Lower interest rates typically reduce borrowing costs, encouraging private equity firms to leverage debt for acquisitions, thereby enhancing deal activity. Conversely, rising rates may dampen investment enthusiasm as financing becomes more expensive, leading to greater scrutiny on valuations and exit strategies. Additionally, overall economic health, including GDP growth and consumer spending, directly impacts market confidence and liquidity, further influencing private equity performance.

Methodology

Data coverage:

The figures are based on deal value, number of deals, the average size of each deal, and assets under management within the Private Equity market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, and publicly available databases. In addition, we use relevant key market indicators and data from country-specific associations, such as: GDP, total investment (% of GDP), household wealth (per Adult), high income (% of population), and number of high-net-worth individuals (HNWI). This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are total investment (% of GDP), household wealth (per Adult), number of high-income persons, and number of high-net-worth individuals (HNWI).

Additional notes:

The market is updated twice a year in case market dynamics change.