Private equity deals in the Midlands increase in 2024 - report
The number of private equity transactions completed in the Midlands increased marginally in 2024, while the total investment figure fell, according to the latest UK Private Equity Review from KPMG UK.
The comprehensive annual study into private equity deal activity found that investment in the region declined by 27.4 per cent in 2024, to a total of £13.3 billion.
The findings come following a period in which the UK experienced a more stable economic climate, with falling inflation and greater interest rate stability; increased political certainty following elections; and a surge in transactions ahead of anticipated changes to Capital Gains Tax.
Despite this fall in investment levels, the volume of deals in the region increased slightly from 157 to 160 year-on-year.
Investment in the Midlands accounted for 8.3 per cent of total new PE backing in the UK.
London continued to deliver the greatest interest from PE funds, attracting £78.1 billion of investment, ahead of the North West (£20.0 billion) and the South East (£15.8 billion).
Stuart Sewell, head of M&A for the Midlands at KPMG UK, said: “Although private equity investment by value in the Midlands fell in 2024, deal volumes remained encouraging, with interest rate cuts likely to stimulate the market in 2025.
“Once again the Midlands made a solid contribution in terms of national investments and the region’s plethora of innovative businesses look to be in good shape to target even larger deals in in the coming months.”
Total private equity investment activity in the UK increased through 2024. 1,699 transactions, with a total value of £158.9 billion were completed during 2024, which represents an almost 12 per cent increase in deal values from 2023.
The majority of deal activity took place in the second half of the year, with values increasing to their highest level since the first half of 2022.
Commenting on the findings, Alex Hartley (pictured), Head of Corporate Finance at KPMG UK, said: “There are encouraging signs from the 2024 data that deal activity may have bottomed out in the UK in 2023, as we saw activity, both in volume and value, pick up last year.
“In particular, we saw significant activity in the second half of the year as many business owners tried to get ahead of expected changes to Capital Gains Tax.
“Given the current signals in the market around increased activity levels – alongside reducing inflation and interest rates and greater political certainty – there is cautious optimism that UK private equity deal activity will see further growth through 2025 and 2026.”
Business services dominated the private equity deal market, representing 43 per cent of the total deals made in 2024, up more than 10 per cent over the previous year.
However, it was TMT which emerged as the hottest sector.
Deal volumes were up nearly 19 per cent year-on-year and cumulative values were up nearly 58 per cent over the same period, capturing more than £40 billion in total deal value.
While deal volumes were both down in Financial Services and the Energy sectors, the value of those deals was greater than their sum.
Financial services represented 11 per cent of the deals, but 14.6 per cent of the value, while energy represented 3 per cent of the deals, but 4.7 per cent of the overall value, indicating that they were both punching above their weight.
Another sector that saw a resurgence was Consumer Goods and Retail, with volumes up 5.3 per cent to 138 and values up 21 per cent to £10.7 billion, reflecting improving consumer confidence through the year.
