A recent analysis by S&P Global Market Intelligence on private equity investments shows the aggregate transaction value for private equity and venture capital investments in the UK plunged 61 per cent year over year in 2022, driven by a decline in large deals.
There were 239 private equity and venture capital-backed M&A deals in the UK in 2022, with a total value of USD28.01 billion compared to 352 transactions aggregating USD72.01 billion in 2021, according to S&P Global Market Intelligence data.
Key Highlights:
Only nine deals in 2022 were valued at more than USD1 billion — the lowest level in five years — and they amounted to nearly three-fourths of the aggregate transaction value.
By comparison, private equity investments in Europe last year were down 24 per cent annually to USD81.68 billion, according to the data. In terms of deals worth USD1 billion or more, Europe had 23, down from 28 in the previous year.
Private equity transactions in the UK are expected to remain slow during the first quarter due in large part to a gap in pricing.
The pricing dislocation between sellers and buyers will impact the number of deals until that gap is bridged. Private equity sponsors will most likely be looking at other ways to bridge the funding gap through higher vendor rollovers, earn-outs and/or more equity funding.
The second quarter is predicted to show an improvement in private equity-backed deals, with the trend pacing up in the last six months of 2023. Deal numbers in the UK will be similar to 2022, but transaction values are likely to trend downward as sellers adjust their price expectations, the firm says.
KKR & Co. Inc.’s pending buyout of power generation company ContourGlobal PLC from Reservoir Capital Group LLC for USD5.79 billion was the UK’s largest private equity or venture capital-backed deal in 2022.
The second-largest was Veritas Capital Fund Management LLC’s acquisition of research and consultancy firm Wood Mackenzie Ltd. from Verisk Analytics Inc. for USD3.30 billion, followed by Clearlake Capital Group LP’s takeover of Chelsea FC Holdings Ltd. for USD3.09 billion.
