BVCA Report on Investment Activity 2019

The BVCA’s annual Report on Investment Activity shows the full breadth of the impact of private equity and venture capital on the UK economy. A total of 1,530 companies received backing in 2019, an increase of 15% on the 2018 figures.
 

1. Fundraising

• Total fundraising in 2019 reached £47.59bn.
• The number of funds raising new capital was 118.

Pension funds provided 38% of all capital raised followed by sovereign wealth funds (14%) and fund of funds (11%). Institutional investors from outside the UK contributed approximately 89%.

Buyout fundraising reached £41.01bn. Pension funds are the largest institutional investor in UK buyout funds contributing 40%, followed by sovereign wealth funds (15%), fund of funds (11%), and insurance companies (10%).

Venture capital fundraising reached £2.4bn. Private individuals contributed 19% to the total VC fundraising amount, followed by pension funds (15%) and fund of funds (13%).

Growth capital reached £3.22bn. Pension funds were the largest contributor at 29% followed by private individuals at 21%. This year’s report showed the continued flows of international sources of funds with circa. 89% of fundraising coming from outside of the UK. This is up from 86% in 2018 and 82% in 2017.
 

2. Investments

• The total equity amount invested in portfolio companies in 2019 increased by 8% year-on-year to £22.33bn.
• The number of companies receiving investment rose 15% to 1530.

Buyout investment increased by 5% year-on-year to £16.86bn. The number of companies backed increased by 9% to 226. Large buyouts accounted for 43% of the buyout market, followed by mega buyouts at 35%. In 2019 Small buyouts remained consistent with £407m invested and 90 companies backed.

Mid-market saw a slight year-on-year decrease of 9% at £3.4bn investing in 101 companies. Venture capital investment increased by 67% year-on-year to £1.65bn with 821 companies backed, an 18% increase. Seed investments increased to £87m in 2019. Early stage investments increased 80% year-on-year in size to £865m. Start-up grew to £210m, an increase of 79%. Later stage investments increased by 39% to £467m.

Growth capital investments increased by 12% to £3.63bn. 467 companies were backed, a 13% increase year-on-year.
 

3. Divestments

• Around 512 companies were exited in 2019, a similar number to 2018.
• By amount of former equity investments (divestments at cost), the total value was £8.19bn.

The most prominent exit routes by amount at cost were sale to another private equity and venture capital firm (36.2%), trade sale (28.1%) and repayment of preference shares (13.2%).

Buyout divestments represented 76% by amount at cost and around 32% by number of companies of all exits in 2019. Venture capital comprised around 25% of all divestments with 128 companies. The most prominent exit route was trade sale, which represented 24% of number of companies divested in 2019.

Growth divestments represented 16% of all exits by amount at cost and 38% by number of companies.