BusinessCorporate FinancePrivate equity funding set to increase

Private equity funding set to increase

Private equity is being considered as a means of funding by a third of middle market companies, according to new research.

The results, compiled by the Economist Intelligence Unit on behalf of KPMG, revealed the number of businesses looking to use private equity funding has increased from around 17% in the autumn of 2003 to 32% now.

While bank financing remains the favourite form of funding for middle market companies, private equity remains attractive because it provides investors willing to take a long view.

Mel Egglenton, head of middle market at KPMG, said: ‘The best way of raising finance is always a key question for growing businesses.

‘It is not surprising to see bank financing continuing to be the most popular method, as businesses understand the way to go about it. However, companies need to consider alternatives particularly if the funds are for an equity risk investment. This is making private equity increasingly attractive.’

Prospects for private equity remain strong due to a more liquid IPO market and the rising number of public to private deals, according to Egglenton.

And more news…

Deloitte and Grant Thornton have played leading roles in the £33.5m management buy out of HFS, one of the UK’s fastest growing independent finance brokers.

The Macclesfield-based group provides broking services for secured and unsecured lending, mortgages, insurance and investment products. The business also provides outsourced call management and financial product placement services to the financial intermediary market.

Paul Naden, managing director of HFS, said: ‘While many of our competitors have sold to major players, the fact that management has bought into HFS is a clear sign of the strength of the business.’

Backing for the deal came from LDC, the private equity arm of Lloyds TSB. Deloitte advisers worked for LDC, while Grant Thornton worked for the HFS management team on the deal.

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