Private equity almost doubles

Investment rose sharply by 43% to more than £86bn ($155bn) since 2002.

Improvements were mainly led by ‘billion-dollar’ deals, though mid-market deals – transactions below one billion – saw a significant increase during the second half of the year.

‘All the signs are that we will see an upturn in investment in early-stage technology companies in 2004. Improving exit routes and an anticipated increase in spending in M&A activity would suggest we will see a good flow of opportunities for investors,’ said Tracey Lefteroff, PwC’s private equity global managing partner.

PwC undertook the research with private equity and venture capital specialists 3i, who interpret the findings as evidence that this year and next will be equally good for business.

‘The second half of the year in general showed an improvement due to increased M&A activity and a recovery in the debt and the equity markets.

This momentum has continued to build in 2004 so far, with fund raising likely to pick up in the second half, fuelling investment in 2005,’ 3i director Patrick Dunne said.

Evidence of the turnaround came last week when investment bank UBS posted record first-quarter profits, which were boosted by improvements in its private equity business from a loss in the first three months of last year to revenues of £72m.

Companies that have withdrawn from public listing with the aid of private equity include Debenhams and Pizza Express, while WHSmith is being pursued by a private equity firm.

The PwC research revealed investment in technology companies is up by $2bn to $42bn in 2003, which indicates renewed confidence in the sector.

PwC said that the figures show private equity has returned to confidence in Europe with improvements predicted for 2004 after $15.7bn of the $27.1bn raised was invested. North America saw investment rise by 67% to $108bn during 2003, a huge increase on the $64bn invested in 2002.

Related reading

PwC office 2