According to the latest research bulletin from the IFSL (International Financial Services London) the UK private equity market is the most developed outside the US, managing 17% of global investments and 15% of funds raised in 2008.
Last year private equity investments fell 40% to $189bn, with buyout activity dropping as private equity firms struggled to obtain debt finance from banks to complete deals. The report also states that private equity investments hit a 12 year low in the first half of 2009, dropping to $24bn, 80% down on the same period in 2008. Private-equity backed deals generated only 7% of global merger & acquisition volume in 2008, the lowest level since 2001 and down from the record high of 21% in 2006. This figure fell even further to 3.5%in the first half of 2009.
Despite the financial crisis fund-raising levels were only down 8% in 2008 to $450bn, a figure influenced heavily by the relatively strong start to the year. The slowdown in fund-raising accelerated in 2009, with under $100bn being raised between January and June, equivalent to a two-thirds drop on the same period in 2008. The secondary market for private equity, where existing stakes in private equity holdings are bought and sold, has seen a record $15.6bn raised in the first half of 2009, already setting a new annual record with six months left in the year.
Meanwhile, global private equity funds under management totalled $2.5 trillion at the end of 2008. The 15% increase during the year was due to strong fund raising activity and an increase in unrealised portfolio investments as firms were reluctant to exit their stakes in market conditions of falling valuations.
Worldwide investments of UK private equity firms mirrored falls on global markets, declining by 38 per cent in 2008 to £19.5bn, while the aggregate value of funds raised fell by a fifth to £23.1bn. The UK private equity market, which remains the most developed outside the US, managed 17% of global investments and 14% of funds raised in 2008. London has successfully held its position as the largest European private equity centre, second only to New York globally.
The full report can be downloaded from the IFSL website
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