Bumper year for private equity as deals soar 257 per cent
The number of UK listed companies taken private by private equity firms jumped from seven to 25 in private equity boom year.
The total value of UK listed companies taken private by private equity firms increased from £2.3bn to £21.1bn in 12 months to 30 September 2020, research compiled by BDO has found.
The audit challenger firm said falls in share prices of some UK listed companies have made them a more attractive prospect to private equity houses, as Covid-19 and Brexit have depressed the valuations of UK listed shares versus their international counterparts.
As of 20 November, the FTSE100 had fallen 16 per cent from its value at the start of the year, compared to falls of 9 per cent for the French CAC 40 index and just 2 per cent for the German DAX. The S&P 500 index in the United States rose by 9 per cent in the same period.
BDO partner and head of global M&A John Stephan said the combination of UK listed companies at attractive multiples and private equity funds with large amounts of unspent cash that they need to invest meant the trend was likely to continue.
According to BDO, management of listed companies have become more receptive to takeovers by private equity firms in recent years.
Listed companies in the technology, financial services and advanced engineering sectors appeared to have been the most targeted by private equity firms in the last year. Six of the 25 businesses taken over were in the technology industry, with a further five belonging to the financial services sector.
The three most recent UK listed companies to have been taken over by PE firms are HML Holdings, the property management company, HWSI Realisation Fund Limited, the fund manager, and Be Heard Group, the marketing agency.