The UK has remained attractive for global private equity investors into the third quarter of this year, according to a new report from S&P Global Market Intelligence.
Companies in the UK lured in 31 per cent of the €18.7bn invested in European, Middle Eastern and African (EMEA) businesses between July and September. This €5.8bn sum was more than double the €2.6bn investment in the same period of 2016.
But in a surprise turn of events, London did not receive the most invested capital. In fact it was Edinburgh, followed by Burton upon Trent and Brentwood, which attracted the most interest in monetary terms from global private equity buyers.
This was mostly due to a few unusually large deals, such as the acquisition of the Edinburgh-based UK Green Investment Bank for €2bn. This accounted for 91 per cent of the money invested in the city.
London retained the crown for the largest number of deals, with 66 transactions bringing in €448m.
Data released last week revealed the UK was headed for its strongest private equity year since the financial crisis, with the highest amount invested in the country between July and September since 2007.
However, S&P's report did reveal there were some clouds on the horizon for the country. Institutional investors around the world have shown increasing interest in private equity, setting more and more money aside to invest in funds. But in 2016, EMEA was the only region with decreasing private equity allocations.
“The UK's decision to leave the EU in June of 2016 seems to have further dented institutional investors' confidence,” said the report.
But private equity managers are still splashing the cash. Funds based in EMEA spent €24.1bn last quarter across 537 new deals – 87 per cent more money than in the same period of last year. Unusually, the amount spent on cross-border deals exceeded that on local transactions. However, S&P noted than this was largely due to the €11.4bn buyout of India’s Essar Oil by a consortium including United Capital Partners, Rosneft and Trafigura.