Private equity investment in the UK is on the rise, with London leading the charge in 2024. According to the latest UK Private Equity Review from KPMG UK, total investment in the region grew by 10.5% to reach £78.1 billion. This increase reflects a period of stability in the UK’s economic climate, marked by falling interest rates and inflation, greater political certainty post-elections, and a flurry of transactions ahead of anticipated changes to Capital Gains Tax.
London, known as a global hub for private equity investment, accounted for nearly half (49.1%) of all new PE backing in the UK. Despite a slight decrease in deal volumes from 757 to 753 year-on-year, average deal values saw improvement. Helen Roxburgh, Partner and Head of KPMG’s London Region M&A team, highlighted London’s continued appeal to PE funds, attracting significant interest and numerous multi-billion-pound investments.
Looking at the national outlook, total private equity investment activity in the UK saw a boost in 2024. A total of 1,699 transactions, valued at £158.9 billion, were completed, representing a nearly 12% increase in deal values from the previous year. The majority of deal activity occurred in the second half of the year, reaching its highest level since the first half of 2022.
Alex Hartley, Head of Corporate Finance at KPMG UK, noted positive signs from the 2024 data, suggesting that deal activity may have bottomed out in 2023. With increasing activity levels, alongside declining inflation, interest rates, and greater political certainty, there is cautious optimism for further growth in UK private equity deal activity in the coming years.
TMT Sector Leads the Way
In 2024, the Technology, Media, and Telecommunications (TMT) sector emerged as the standout performer in the private equity deal market. TMT saw a significant uptick in deal volumes, up nearly 19% year-on-year, with cumulative values soaring by nearly 58% to over £40 billion. This sector’s impressive growth overshadowed others, showcasing its allure to investors and its potential for substantial returns.
While Business Services continued to dominate the private equity deal market, representing 43% of total deals, TMT’s exponential growth highlighted its dynamism and attractiveness to investors seeking high-growth opportunities. Additionally, Financial Services and Energy sectors, though experiencing a decrease in deal volumes, punched above their weight in terms of deal value, indicating solid performance and investor confidence.
Consumer Goods and Retail also experienced a resurgence in 2024, with deal volumes up by 5.3% and values increasing by 21% to £10.7 billion. This sector’s growth mirrored improving consumer confidence throughout the year, reflecting a positive trend in consumer spending and market sentiment.
In conclusion, the private equity landscape in the UK is evolving, with London maintaining its status as a prime destination for investment. With a diverse range of sectors showing promise and continued interest from investors, the outlook for UK private equity deal activity remains optimistic for the foreseeable future.
