West Country firms attracted billions of pounds of private equity investment last year although the total number of deals fell slightly, a new report has found. Investment activity in the region grew by 3.4% over the year to £6.2bn, according to the latest UK Private Equity Review from KPMG UK.
The findings reflect a period in which the UK experienced a more stable economic climate, with interest rates and inflation falling; greater political certainty following elections; and a surge in transactions ahead of anticipated changes to capital gains tax.
Across the region, there were 100 deals in total – dropping from 104 the year before. KMPG said the fall was driven by suppressed deal volumes in H1, followed by strong recovery in H2, with the Autumn Budget contributing to transactions increasing by 32.6%.
Investment in the South West accounted for 3.9% of total new private equity backing in the UK. London continued to deliver the greatest interest from private equity funds, attracting £78.1bn of investment, ahead of the North West (£20bn) and the South East (£15.8bn).
John Levis, head of corporate finance in the South West at KPMG UK, said: “It’s great to see PE activity in the South West increase in 2024 – testament to the ambition of the region’s innovative businesses.
“Generally, firms have started 2025 with much more clarity and confidence on the economic landscape ahead of them and the prospect of further cuts to interest rates that would serve to stimulate M&A. We’re looking forward to seeing South West businesses continue their growth journeys and attract further investment as a result.”
Nationally, total private equity investment activity in the UK increased last year. There were 1,699 transactions, with a total value of £158.9bn invested in British companies – an almost 12% 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.
Alex Hartley, head of corporate Finance at KPMG UK, added: “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.”
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