BVCA Private Equity and Venture Capital Report on Investment Activity … Autumn15.pdf · Venture...

BVCA Private Equity and Venture Capital Report on Investment Activity 2014Autumn 2015

Percentage of UK Investee Companies by Region

East of England 4%East Midlands 3%London 24%North East 4%North West 10%Northern Ireland 2%Scotland 8%South East 16%South West 7%Wales 6%West Midlands 8%Yorkshire & The Humber 7%

Contents

Summary 3

Data Tables 4

Appendix Methodology and Definitions 14

BVCA Private Equity and Venture Capital Report on Investment Activity 2014 3

Summary

2014 was a positive year for the UK’s private equity and venture capital industry, with global investment by our members growing to just under £13.4bn globally in 2014 from £10.1bn the previous year. Moreover, 2014 saw the greatest amount divested in the industry since the BVCA began collecting data, with divestment figures reaching £21.6bn, as firms focused on returning value to their investors.

Domestic investment by BVCA members was solid in 2014, with investments into the UK growing to over £4.7bn this year from £4.1bn in 2013. Global investment also remained strong, with European investment reaching £6.4bn this year from £4.1bn, US investment remaining largely the same at £1.6bn and investment into the rest of the world more than doubling to £606m in 2014.

The most striking trend for 2014 was the unprecedented surge in divestments, nearly doubling last year’s figure of £12.9bn. This record level of divestment suggests increasing strength in the industry, as firms began to achieve liquidity on many of their pre-financial crisis investments.

The most active exit routes this year were trade sales – which more than doubled from £2bn in 2013 to over £4.4bn this year – followed closely by sales of quoted equity post flotation, which grew from just under £800m last year to over £4.2bn in 2014, reflecting the relative buoyancy of the IPO market in recent years. This continued strength in the IPO market was reflected in firms raising a record £2.7bn from flotations this year. This trend of the re-emergence of IPOs as an exit route will only help the industry over coming years.

An equally noteworthy aspect of this year’s report has been the greater regional balance in investment across Northern England and Scotland. While London and the South East continue to lead by amount invested, growing from £2bn in 2013 to £2.7bn this year, other parts of the country have also experienced considerable increases in investment, with the West Midlands more than doubling their 2013 levels to £336m and Scotland almost doubling last year’s figure to £206m. Across England, both the North West and Yorkshire and The Humber saw marginal increases at £448m and £397m, respectively, while Northern Ireland also saw its investments increase from £10m in 2013 to £16m. This continuing trend towards greater investment decentralisation is a positive development for the long-term future of the UK economy, and bodes well for the current political focus on creating a Northern Powerhouse.

With regards to investment by industry sector, 2014 saw an increase in investment in technology, growing from £841m to £1.2bn, and was followed by the financial sector and consumer services at £1.1bn and £906m, respectively. In contrast, investment in healthcare and industrials continued to fall, to £442m and £535m respectively.

Finally, fundraising largely kept pace with the strong showing from last year, with £10.8bn raised in 2014 compared to £11.2bn in 2013. Pension funds once again represented the single most important source of funding, with £2.7bn raised from these investors representing 25% of total fundraising. This year was also important for Small MBOs who saw their fundraising increase from £162m in 2013 to over £1.1bn. VC fundraising grew marginally from £259m last year to £288m this year and Middle MBOs saw an increase from £4.2bn to £5.2bn.

Joe Steer, Director, Research

Summary

Data Tables1

Table 1. Global Investment Activity of BVCA Members

2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Number of eligible BVCA members 137 159 166 183 194 193 208 214 192 179 168 164 164

% of survey respondents 96 96 96 97 97 100 99 100 100 100 100 100 98

Total amount invested (£m) 13,363 10,127 12,288 18,610 20,447 12,629 20,025 31,634 21,853 11,676 9,679 6,357 5,466

Number of companies financed 891 857 1,009 1,048 1,073 976 1,672 1,680 1,630 1,535 1,566 1,493 1,459

Table 2a. Investment by Country

Country Number of companies % of companies Amount invested (£m) % of amount invested

2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

UK 728 710 820 82 83 81 4,720 4,109 5,767 35 41 47

US 43 35 43 5 4 4 1,634 1,673 1,484 12 17 12

Europe 104 103 133 12 12 13 6,404 4,053 4,681 48 40 38

Rest of World 16 9 13 2 1 1 606 291 356 5 3 3

Total 891 857 1,009 100 100 100 13,363 10,127 12,288 100 100 100

Table 2b. 2014 Quarterly Investment by Country

Country Number of companies % of companies Amount invested (£m) % of amount invested

Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

UK 213 176 157 182 728 29 24 22 25 100 1,726 665 1,230 1,099 4,720 29 24 22 25 100

US 12 10 7 14 43 28 23 16 33 100 286 360 598 389 1,634 28 23 16 33 100

Europe 22 27 29 26 104 21 26 28 25 100 1,586 1,697 2,390 731 6,404 21 26 28 25 100

Rest of World 3 5 5 3 16 19 31 31 19 100 67 370 152 16 606 19 31 31 19 100

Total 250 218 198 225 891 28 24 22 25 100 3,665 3,092 4,370 2,236 13,363 28 24 22 25 100

1. All figures in this report have been rounded to the nearest integer. For this reason individual figures may not sum to totals.

4 BVCA Private Equity and Venture Capital Report on Investment Activity 2014

Data tables

Table 3. Overseas Investment by Financing Stage

Financing Stage Number of companies % of companies Amount invested (£m) % of amount invested

2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

Seed 87

2 55

1 111

2 -1

-

Start-up 3 10 2 5 3 70 - 1

Early Stage 22 29 32 13 19 16 32 23 64 - - 1

Later stage VC 16 23 35 9 15 18 50 110 229 1 2 4

Total Venture Capital 49 59 79 29 40 40 85 144 365 1 2 6

Expansion/Growth Capital 2729

51 1619

26 386374

1,081 46

17

Bridge Financing 5 5 3 3 3 2 - -

Total Expansion 32 29 56 19 19 29 389 374 1,083 5 6 17

Replacement Capital 3

11

0 2

7

0 22

1,022

0 -

17

0

Secondary Buyout 10 9 6 5 1,398 1,395 16 21

PIPE 0 0 0 0 0 0 0 0

Refinancing Bank Debt 0 0 4 0 0 2 0 0 36 0 0 1

Total Replacement Capital 13 11 13 8 7 7 1,420 1,022 1,430 16 17 22

Management buyout (MBO) 50 32 41 30 21 21 4,839 3,718 3,498 56 62 54

Management buy-in (MBI) 3 0 2 2 0 1 310 0 4 4 0 -

Total MBO/MBI 53 32 43 31 21 22 5,149 3,718 3,503 60 62 54

Public to Private 32

0 21

0 878448

0 107

0

Rescue/Turnaround 2 2 1 1 3 5 - -

Other 17 16 3 10 11 2 718 312 135 8 5 2

Total Other Late Stage 22 18 5 13 12 3 1,600 760 140 19 13 2

Total 169 149 196 100 100 100 8,643 6,018 6,521 100 100 100

1. The number of companies in some financing stage categories and their subtotals add up to more than the total number of companies invested in. This is due to some companies receiving more than one investment within the year at different financing stages. Please refer to the appendix for further information.

2. – indicates a value greater than 0 but less than 0.53. Some financing stages have been amalgamated where there are instances of single deals, in order to preserve confidentiality

Table 4. UK Investment by Financing Stage


2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

Seed 24 23 22 3 3 2 6 5 5 - - -

Start-up 63 79 76 8 10 8 22 56 57 - 1 1

Early Stage 171 213 229 23 28 26 80 81 157 2 2 3

Later stage VC 62 60 104 8 8 12 185 156 125 4 4 2

Total Venture Capital 320 375 431 42 49 48 293 298 343 6 7 6

Expansion/Growth Capital 228 219 282 30 28 31 850 683 1,465 18 17 25

Bridge Financing 7 7 14 1 1 2 15 2 6 - - -

Total Expansion 235 226 296 31 29 33 865 685 1,470 18 17 26

Replacement Capital 21 24 14 3 3 2 105 119 43 2 3 1

Secondary Buyout 14 21 11 2 3 1 192 927 958 4 23 17

PIPE 0 0 3 0 0 - 0 0 5 0 0 -

Refinancing Bank Debt 5 5 16 1 1 2 8 18 127 - - 2

Total Replacement Capital 40 50 44 5 6 5 305 1,064 1,133 6 26 20

Management buyout (MBO) 97 75 93 13 10 10 2,863 1,679 2,568 61 41 45

Management buy-in (MBI) 9 7 7 1 1 1 117 161 110 2 4 2

Total MBO/MBI 106 82 100 14 11 11 2,980 1,840 2,677 63 45 46

Public to Private14

0 02

0 0164

0 03

0 0

Rescue/Turnaround 13 21 2 2 95 135 2 2

Other 39 25 4 5 3 - 112 128 8 2 3 -

Total Other Late Stage 53 38 25 7 5 3 276 223 143 6 5 2

Total 754 771 896 100 100 100 4,720 4,109 5,767 100 100 100


2. – indicates a value greater than 0 but less than 0.53. Some financing stages have been amalgamated where there are instances of single deals, in order to preserve confidentiality.


Data tables

Table 5a. MBOs by Investment Size (UK)

Size Number of companies % of companies Amount invested (£m) % of amount invested

2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

Small (<£10m) 47 35 45 48 47 48 184 154 171 6 9 7

Mid-sized (£10m – £100m) 40 37 41 41 49 44 1,219 1,007 1,016 43 60 40

Large (>£100m) 10 3 7 10 4 8 1,461 517 1,380 51 31 54

Total 97 75 93 100 100 100 2,863 1,679 2,568 100 100 100

1. The number of companies in some financing stage categories and their subtotals add up to more than the total number of companies invested in. This is due to some companies receiving more than one investment within the year at different financing stages. Please refer to the appendix for further information.2. Size bandings are based on amount of equity invested by BVCA private equity members, not the total transaction size.

Table 5b. MBIs by Investment Size (UK)

Size Number of companies % of companies Amount invested (£m) % of amount invested

2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

Small (<£10m) 57

2 56100

29 11161

7 9100

6

Mid-sized (£10m - £100m) 4 5 44 71 107 103 91 94

Large (>£100m) 0 0 0 0 0 0 0 0 0 0 0 0

Total 9 7 7 100 100 100 117 161 110 100 100 100


2. Size bandings are based on amount of equity invested by BVCA private equity members, not the total transaction size.3. Some financing stages have been amalgamated where there are instances of single deals, in order to preserve confidentiality.

Table 6. Average Amount Invested by Stage (UK)

Financing Stage Average Amount Invested, £000s

2014 2013 2012

Seed 260 217 206

Start-up 352 711 744

Early Stage 466 380 686

Later stage VC 2,977 2,601 1,203

Total Early Stage 914 795 796

Expansion/Growth Capital 3,730 3,119 5,194

Bridge financing 2,151 251 422

Total Expansion 3,683 3,030 4,968

Replacement Capital 5,007 4,965 3,059

Secondary Buyout 13,704 44,123 87,131

PIPE 0 0 1,584

Refinancing Bank Debt 1,667 3,555 7,929

Total Replacement Capital 7,633 21,270 25,747

Management buyout(MBO) 29,516 22,383 27,610

Management buy-in(MBI) 13,016 22,973 15,664

Total MBO/MBI 28,115 22,433 26,774

Public to Private11,741

0 0

Rescue/Turnaround 7,313 6,426

Other 2,871 5,125 1,899

Total Other Late Stage 5,214 5,874 5,702

Total 6,260 5,330 6,436

1. Some financing stages have been amalgamated where there are instances of single deals, in order to preserve confidentiality.


Data tables

Table 7. Investment by Industry Sector (UK)

Industry Sector Number of companies % of companies Amount invested % of amount invested

2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

Basic Materials - Chemicals 7 8 18 1 1 2 5 11 5 - - -

Basic Materials - Forestry & Paper 0 0 0 0 0 0 0 0 0 0 0 0

Basic Materials - Industrial Metals & Mining 03

3 0-

- 01

2 0-

-

Basic Materials - Mining 0 0 0 0 0 0 0 0

Total Basic Materials 7 11 21 1 2 3 5 12 8 - - -

Consumer Goods - Beverages 5 2 2 1 - - 81 26 24 2 1 -

Consumer Goods - Food Producers 7 11 12 1 2 1 17 107 45 - 3 1

Consumer Goods - Household Goods & Home Construction 16 11 12 2 2 1 74 50 51 2 1 1

Consumer Goods - Automobiles & Parts 13 8 6 2 1 1 91 77 47 2 2 1

Consumer Goods - Leisure Goods 15 8 12 2 1 1 96 33 202 2 1 4

Consumer Goods - Personal Goods 22 21 13 3 3 2 281 167 42 6 4 1

Consumer Goods - Tobacco 0 0 0 0 0 0 0 0 0 0 0 0

Total Consumer Goods 78 61 57 11 9 7 640 460 411 14 11 7

Consumer Services - Food & Drug Retailers 7 7 8 1 1 1 19 74 65 - 2 1

Consumer Services - General Retailers 23 18 42 3 3 5 203 55 306 4 1 5

Consumer Services - Media 12 29 31 2 4 4 327 245 140 7 6 2

Consumer Services - Travel & Leisure 29 31 35 4 4 4 357 377 410 8 9 7

Total Consumer Services 71 85 116 10 12 14 906 751 921 19 18 16

Financials - Financial Services 26 25 18 4 4 2 966 244 228 20 6 4

Financials - Banks 0 0 0 0 0 0 0 0 0 0 0 0

Financials - Life Insurance 0 0

8

0 0

1

0 0

185

0 0

3Financials - Non-Life Insurance

99

11

6957

11

Financials - Equity Investment Instruments 0 0 0 0

Financials - Non-equity Investment Instruments 0 0 0 0 0 0 0 0

Financials - Real Estate Investment Trusts 0 0 0 0 0 0 0 0 0 0 0 0

Financials - Real Estate Investment & Services 11 11 10 2 2 1 36 38 457 1 1 8

Total Financials 46 45 36 6 6 4 1,070 338 870 23 8 15

Health Care - Equipment & Services 76 77 98 10 11 12 370 441 742 8 11 13

Health Care - Pharmaceuticals & Biotechnology 58 58 63 8 8 8 72 219 457 2 5 8

Total Health Care 134 135 161 18 19 20 442 660 1,199 9 16 21

Industrials - Aerospace & Defense 6 8 9 1 1 1 8 116 36 - 3 1

Industrials - Construction & Materials 7 13 14 1 2 2 45 84 121 1 2 2

Industrials - Electronic & Electrical Equipment 25 20 30 3 3 4 27 39 29 1 1 1

Industrials - Engineering 11 11 14 2 2 2 66 58 44 1 1 1

Industrials - General Industrials 19 19 16 3 3 2 81 245 93 2 6 2

Industrials - Support Services 43 57 71 6 8 9 271 301 1,107 6 7 19

Industrials - Transportation 7 3 6 1 - 1 37 15 17 1 - -

Total Industrials 118 131 160 16 18 20 535 858 1,448 11 21 25

Oil & Gas - Alternative Energy 7 14 19 1 2 2 8 48 22 - 1 -

Oil & Gas - Oil & Gas Producers 2 2 5 - - 1 11 6 11 - - -

Oil & Gas - Oil Equipment, Services & Distribution 20 15 18 3 2 2 172 95 128 4 2 2

Total Oil & Gas 29 31 42 4 4 5 190 149 160 4 4 3

Technology - Hardware & Equipment 24 25 29 3 4 4 101 47 24 2 1 -

Technology - Software & Computer Services 155 160 170 21 23 21 470 692 386 10 17 7

Total Technology 179 185 199 25 26 24 572 739 410 12 18 7

Telecommunications - Fixed Line 5 2 5 1 - 1 18 - 13 - - -

Telecommunications - Mobile 7 9 8 1 1 1 11 8 273 - - 5

Total Telecommunications 12 11 13 2 2 2 29 8 286 1 - 5

Utilities - Electricity 3 5 3 - 1 - 3 23 3 - 1 -

Utilities - Gas, Water & Multiutilities 4 3 5 1 - 1 34 6 28 1 - -

Total Utilities 7 8 8 1 1 1 37 28 31 1 1 1

Other 47 7 7 6 1 1 292 104 24 6 3 -

Total 728 710 820 100 100 100 4,720 4,109 5,767 100 100 100

1. – indicates a value greater than 0 but less than 0.52. The Industry Classification Benchmark (ICB) has been used to classify individual company investments by industry and subsector.3. Some sectors have been amalgamated where there are instances of single deals, in order to preserve confidentiality


Data tables

Table 8. Technology Investment (UK)

Industry Sector Number of companies % of companies Amount invested (£m) % of amount invested

2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

Mobile Telecommunications6 8

52 2

14 7

3- 1

-

Fixed Line Telecommunications 4 1 3 -

Computer:

Computer Hardware 2 2 4 1 1 1 1 - 3 - - -

Internet 29 31 22 8 9 5 42 331 54 3 39 8

Semiconductors 9 11 10 2 3 2 3 4 7 - - 1

Software 88 80 111 24 23 27 312 61 144 26 7 21

Other Electronics 19 15 20 5 4 5 16 6 10 1 1 2

Biotechnology 33 31 34 9 9 8 23 20 25 2 2 4

Medical:

Medical Equipment 24 18 29 7 5 7 12 7 10 1 1 1

Pharmaceuticals 16 15 14 4 4 3 38 61 13 3 7 2

Health Care 17 17 19 5 5 5 44 17 45 4 2 7

Other 123 114 138 34 33 34 712 326 366 59 39 54

Total 366 342 410 100 100 100 1,207 841 681 100 100 100

1. – indicates a value greater than 0 but less than 0.52. Technology classification is included in the appendix (p 14)

Table 9. 2014 Technology Investment by Stage (UK)

Industry sector Number of companies Amount invested (£m)

Early Stage Expansion

Replacement Capital MBO/MBI Other Total

Early Stage Expansion

Replacement Capital MBO/MBI Other Total

Mobile Telecommunications3

3 0 0 06 1

4 0 0 04

Fixed Line Telecommunications 0 0 0 0 0 0 0 0

Computer:

Computer Hardware 2 0 0 0 0 2 1 0 0 0 0 1

Internet 23 6 0

8

0

184

10 11 0

267

0

396

Semiconductors 9 2 0 0 2 1 0 0

Software 61 203

0 30 2914

0

Other Electronics 14 32

3 61

Biotechnology 28 5 0 0 21 2 0 0

Medical:

Medical Equipment 233

0 0 0

184

106

0 0 0

806Pharmaceuticals 15 0

20 9 0

520

Health Care 13 2 011

9 7 017

Other 60 32 3 20 33 70 15 578

Total 251 76 6 30 13 376 129 134 29 897 18 1,207


2. – indicates a value greater than 0 but less than 0.53. Technology classification is included in the appendix (p 14)


Data tables

Table 10. Investment in ‘Cleantech’ Companies by Stage (UK)


2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

Venture 60 65 102 54 65 63 31 36 67 5 23 29

Expansion 25 26 46 22 26 29 25 50 71 4 32 31

Replacement Capital 2 3 4 2 3 2 6 32 22 1 21 9

MBO/MBI 17 2 7 15 2 4 556 31 72 89 20 31

Other 8 4 2 7 4 1 5 7 - 1 4 -

Total 112 100 161 100 100 100 624 156 232 100 100 100


2. Some financing stages have been amalgamated where there are instances of single deals, in order to preserve confidentiality.3. Cleantech is defined in the appendix (p 14)

Table 11. Investment by Region (UK)

Region Number of companies % of companies Amount invested (£m) % of amount invested

2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

London 173 169 191 24 24 23 2,145 1,580 2,062 45 38 36

South East 114 83 115 16 12 14 578 452 1,281 12 11 22

South East & London 287 252 306 39 35 37 2,723 2,032 3,343 58 49 58

South West 50 46 49 7 6 6 233 371 172 5 9 3

East of England 29 35 39 4 5 5 48 176 424 1 4 7

West Midlands 57 63 77 8 9 9 336 133 332 7 3 6

East Midlands 23 40 32 3 6 4 249 443 163 5 11 3

Yorkshire & The Humber 53 39 39 7 5 5 397 361 131 8 9 2

North West 75 83 66 10 12 8 448 319 535 10 8 9

North East 30 61 82 4 9 10 12 97 410 - 2 7

Scotland 61 44 67 8 6 8 206 116 159 4 3 3

Wales 47 29 37 6 4 5 51 51 87 1 1 2

Northern Ireland 16 18 26 2 3 3 16 10 9 - - -

Total 728 710 820 100 100 100 4,720 4,109 5,767 100 100 100

1. – indicates a value greater than 0 but less than 0.5

Table 12. Investment activity by region compared to total number of VAT registered local units

Region Number of VAT registered

local unitsNumber of private equity

backed companiesCompanies invested in per 1,000 of total

VAT registered local units

2014 2013 2012 2014 2013 2012 2014 2013 2012

London 461,025 432,095 419,735 173 169 191 0.38 0.39 0.46

South East 413,525 400,665 399,755 114 83 115 0.28 0.21 0.29

South East & London 874,550 832,760 819,490 287 252 306 0.33 0.30 0.37

South West 247,965 241,550 241,265 50 46 49 0.20 0.19 0.20

East of England 266,275 256,130 255,125 29 35 39 0.11 0.14 0.15

West Midlands 215,680 209,800 208,975 57 63 77 0.26 0.30 0.37

East Midlands 181,115 175,025 174,650 23 40 32 0.13 0.23 0.18

Yorkshire & The Humber 192,605 187,530 187,260 53 39 39 0.28 0.21 0.21

North West 265,975 256,180 255,820 75 83 66 0.28 0.32 0.26

North East 78,205 75,370 75,630 30 61 82 0.38 0.81 1.08

Scotland 203,755 198,280 197,760 61 44 67 0.30 0.22 0.34

Wales 113,215 110,500 111,680 47 29 37 0.42 0.26 0.33

Northern Ireland 81,900 82,365 82,880 16 18 26 0.20 0.22 0.31

Total 2,721,240 2,625,490 2,610,535 728 710 820 0.27 0.27 0.31

Source for 2012/13/14: ‘UK Business: Activity, Size and Location - [2012/13/14]’ (http://www.ons.gov.uk)


Data tables

Table 13. Investment Stage Analysis by Region (UK) – Number of Companies

Region Venture capital Expansion Replacement capital MBO/MBI Other stage

Number % Number % Number % Number % Number %2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

London 64 80 80 20 21 19 56 57 65 24 25 22 10 17 14 25 34 32 36 20 35 34 24 35 11 9 9 21 24 36

South East 42 41 58 13 11 13 50 31 54 21 14 18 8 3 7 20 6 16 18 9 8 17 11 8 5 7 4 9 18 16

South East & London 106 121 138 33 32 32 106 88 119 45 39 40 18 20 21 45 40 48 54 29 43 51 35 43 16 16 13 30 42 52

South West 11 11 12 3 3 3 27 22 33 11 10 11 3 5 4 8 10 9 6 7 6 6 9 6 5 3

2

9 8

8East of England 22 22 20 7 6 5 7 13 14 3 6 53 5

48 10

97

4 57

5 5 23

48

West Midlands 27 41 34 8 11 8 20 18 38 9 8 13 3 7 4 10 5 10 4 8

East Midlands 9 13 21 3 3 5 6 11 10 3 5 3 2 5 0 5 10 0 5 10 6 5 12 6 2 5 0 4 13 0

Yorkshire & The Humber 25 20 17 8 5 4 12 16 11 5 7 4 5 3 2 13 6 5 9 4 8 8 5 8 5 2 3 9 5 12

North West 28 44 29 9 12 7 26 18 20 11 8 7 69 5

1518 11 8

1514 8

1814

8 4 2 15 11 8

North East 24 37 80 8 10 19 5 16 10 2 7 3 0 0 7 9 0 0 0 0 0 0

Scotland 24 30 32 8 8 7 19 15 32 8 7 11

3

3 3

8

6 7 10 0 3 9 0 3 6

5 5

11

13 20Wales 31 22 24 10 6 67

5 63

2 2 0 2 0 57 2 5 7 2 5

5 9

Northern Ireland 13 14 24 4 4 6 4 3 2 1 0 0 0 0 0 0

Total 320 375 431 100 100 100 235 226 296 100 100 100 40 50 44 100 100 100 106 82 100 100 100 100 53 38 25 100 100 100


2. – indicates a value greater than 0 but less than 0.53. Some regions have been amalgamated where there are instances of single deals, in order to preserve confidentiality.

Table 14. Investment Stage Analysis by Region – Amount invested (UK)

RegionVenture capital Expansion Replacement capital MBO/MBI Other stage

Amount (£m) % Amount (£m) % Amount (£m) % Amount (£m) % Amount (£m) %2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014 2013 2012

London 71 100 126 24 34 37 308 254 394 36 37 27 44 400 85 14 38 8 1,670 768 1,366 56 42 51 53 88 90 19 40 63

South East 22 14 55 8 5 16 219 124 360 25 18 24 34 94 813 11 9 72 288 163 43 10 9 2 15 16 9 5 7 6

South East & London 93 114 182 32 38 53 527 377 754 61 55 51 78 494 898 25 46 79 1,958 931 1,409 66 51 53 68 104 99 25 47 70

South West 23 4 38 8 1 11 50 43 84 6 6 6 7 13 15 2 1 1 134 268 35 4 15 1 19 3

-

7 1

-East of England 14 25 23 5 8 7 10 22 11 1 3 129 29

1039 3

9242

126 2888

7 11 76

33

West Midlands 5 16 16 2 5 5 58 41 71 7 6 5 75 7 44 171 2 6 18 6

East Midlands 4 10 7 2 3 2 10 21 17 1 3 1 10 229 0 3 22 0 223 180 139 7 10 5 2 15 0 1 7 0

Yorkshire & The Humber 70 4 15 24 1 4 27 31 21 3 5 1 58 174 6 19 16 - 97 89 83 3 5 3 144 64 7 52 29 5

North West 9 94 13 3 31 4 105 61 51 12 9 3 11684 30

388 3 210

110477 7

618

9 22 - 3 10 -

North East 7 7 16 2 2 5 5 7 357 1 1 24 0 0 71 4 0 0 0 0 0 0

Scotland 53 15 23 18 5 7 57 55 94 7 8 6

7

41 2

2

4 - 85 0 40 3 0 1 4

8 36

2

4 25Wales 12 7 9 4 2 316

24 92

4 1 0 5 0 -31 19 36 1 1 1

6 2

Northern Ireland 2 4 2 1 1 1 3 1 - - 0 0 0 0 0 0

Total 293 298 343 100 100 100 865 685 1,470 100 100 100 305 1,064 1,133 100 100 100 2,980 1,840 2,677 100 100 100 276 223 143 100 100 100



Data tables

Table 15. 2014 Industry Sector Analysis by Region (UK) – Number of Companies

Region Oil & gas, basic materials

& industrials

Consumer goods

Health care & consumer

services

Telecoms, utilities

& financials

Technology Other

Number % Number % Number % Number % Number % Number %

London 22 14 16 21 54 26 24 37 50 28 7 15

South East 28 18 10 13 43 21 8 12 17 9 8 17

South East & London 50 32 26 33 97 47 32 49 67 37 15 32

South West 12 8 5 6 10 5 4 6 13 7 6 13

East of England 5 3 2 3 9 4 2 3 8 4 3 6

West Midlands 16 10 11 14 12 6 3 5 12 7 3 6

East Midlands 5 3 2 3 9 4 2 3 3 2 2 4

Yorkshire and The Humber 11 7 10 13 15 7 5 8 7 4 5 11

North West 17 11 13 17 22 114 6

13 7 7 15

North East 3 2 5 6 4 2 14 8 3 6

Scotland 23 15

4 5

7 3 7 11 20 11 3 6

Wales 9 6 17 8 6 9 13 7 0 0

Northern Ireland 3 2 3 1 0 0 9 5 0 0

Total 154 100 78 100 205 100 65 100 179 100 47 100

1. Some regions have been amalgamated where there are instances of single deals, in order to preserve confidentiality.

Table 16. 2014 Industry Sector Analysis by Region (UK) – Amount Invested

Region Oil & gas, basic materials & industrials

Consumer goods

Health care & consumer

services

Telecoms, utilities & financials

Technology Other

Amount (£m) %

Amount (£m) %

Amount (£m) %

Amount (£m) %

Amount (£m) %

Amount (£m) %

London 184 25 230 36 556 41 811 71 285 50 80 27

South East 157 21 77 12 101 8 71 6 146 26 26 9

South East & London 340 47 307 48 657 49 882 78 431 75 106 36

South West 30 4 4 1 27 2 23 2 47 8 102 35

East of England 2 - 1 - 15 1 2 - 4 1 24 8

West Midlands 81 11 19 3 75 6 134 12 10 2 16 6

East Midlands 7 1 162 25 54 4 18 2 3 - 6 2

Yorkshire and The Humber 51 7 97 15 207 15 18 2 2 - 21 7

North West 55 7 41 6 268 2027 2

42 7 16 5

North East 1 - 2 - 6 - 2 - 1 -

Scotland 156 21

7 1

22 2 18 2 10 2 1 -

Wales 7 1 18 1 14 1 6 1 0 0

Northern Ireland 1 - - - 0 0 15 3 0 0

Total 731 100 640 100 1,349 100 1,136 100 572 100 292 100



Data tables


Data tables

Table 17. UK Investment by type of PE organisation

Type of private equity organisation Amount invested (£m) % of amount invested

2014 2013 2012 2014 2013 2012

Organisations which manage third-party funds (Independents) 2,730 2,024 3,289 58 49 57

Organisations which invest own or parent company money (Captives) 506 459 447 11 11 8

Organisations which do both (Semi-captives) 1,484 1,627 2,031 31 40 35

Total 4,720 4,109 5,767 100 100 100

Table 18. Funds Raised by Source

Type of source Amount raised (£m) % of amount raised

2014 2013 2012 2014 2013 2012

Pension Funds UK 305 137 665 3 1 11

Overseas 2,373 2,805 419 22 25 7

Total 2,677 2,943 1,084 25 26 18

Insurance Companies UK 54 56 509 - - 9

Overseas 464 1,092 154 4 10 3

Total 518 1,148 663 5 10 11

Corporate Investors UK 84 252 713 1 2 12

Overseas 69 240 7 1 2 -

Total 154 492 720 1 4 12

Banks UK 0 0 5 0 0 -

Overseas 106 101 32 1 1 1

Total 106 101 37 1 1 1

Family Offices UK 147 94 42 1 1 1

Overseas 739 368 43 7 3 1

Total 886 462 85 8 4 1

Funds of Funds UK 280 300 84 3 3 1

Overseas 1,288 1,157 680 12 10 11

Total 1,568 1,458 764 14 13 13

Government Agencies UK 8 25 424 - - 7

Overseas 143 25 18 1 - -

Total 151 50 441 1 - 7

Academic Institutions UK 77 0 7 1 0 -

Overseas 685 65 70 6 1 1

Total 761 65 77 7 1 1

Private Individuals UK 270 183 326 2 2 5

Overseas 444 309 22 4 3 -

Total 714 492 348 7 4 6

Capital Markets UK 1 123 42 - 1 1

Overseas 0 27 0 0 - 0

Total 1 150 42 - 1 1

Sovereign Wealth Funds UK 0 0 1,138 0 0 19

Overseas 1,000 1,890 170 9 17 3

Total 1,000 1,890 1,308 9 17 22

Others UK 48 1,032 387 - 9 6

Overseas 2,238 917 17 21 8 -

Total 2,286 1,949 404 21 17 7

Total UK 1,273 2,201 4,342 12 20 73

Total Overseas 9,549 8,997 1,631 88 80 27

Grand Total 10,822 11,198 5,973 100 100 100

1. – indicates a value greater than 0 but less than 0.52. UK includes Bermuda, Cayman Islands, Channel Islands and British Virgin Islands

Table 19. Funds Raised by Country

Country Amount raised (£m) % of amount raised

2014 2013 2012 2014 2013 2012

UK 1,273 2,201 4,342 12 20 73

France 116 80 134 1 1 2

Germany 266 522 85 2 5 1

Ireland 0 44 16 0 - -

Netherlands 616 427 50 6 4 1

Sweden 110 171 52 1 2 1

Switzerland 510 445 152 5 4 3

Rest of Europe 510 422 227 5 4 4

United States 5,420 4,314 534 50 38 9

Canada 349 541 192 3 5 3

Australia 97 265 0 1 2 0

China 61 467 1 1 4 -

Japan 125 114 0 1 1 0

Middle East 698 386 184 6 3 3

Africa 59 48 4 1 - -

Other 612 764 0 6 7 0

Total 10,822 11,211 5,973 100 100 100

1. UK includes Bermuda, Cayman Islands, Channel Islands and British Virgin Islands2. – indicates a value greater than 0 but less than 0.5

Table 20. Funds Raised by Investment Focus

Focus Amount raised (£m) % of amount raised

2014 2013 2012 2014 2013 2012

Large MBO 4,181 6,555 3,634 39 58 61

Middle MBO 5,204 4,235 1,170 48 38 20

Small MBO 1,149 162 722 11 1 12

VC 288 259 428 3 2 7

Generalist 0 0 19 0 0 -

Total 10,822 11,211 5,973 100 100 100


Table 21. 2014 Divestments

Type of divestment Amount divested Number of divestments Number of companies

£m % Number % Number %

Divestment on Flotation (IPO) 2,668 12 36 4 29 5

Repayment of Preference Shares/Loans 3,683 17 334 33 144 24

Sale of quoted equity post flotation 4,203 19 82 8 51 9

Sale to another Private Equity firm 2,702 13 77 8 61 10

Sale to Financial Institution 691 3 67 7 32 5

Sale to Management (Buy-back) 1,420 7 71 7 45 8

Trade Sale 4,415 20 197 20 145 24

Write Offs 732 3 55 6 39 7

Others 1,077 5 80 8 46 8

Total 21,592 100 999 100 592 100


Data tables

Appendix Methodology and DefinitionsIn early 2015, BVCA’s Benchmark data collection system collected data on investments made by BVCA private equity and venture capital members during the calendar year 2014. A 96% response rate was achieved, which included virtually every major private equity and venture capital firm in the UK. In order to ensure only qualifying investments were included in the analysis certain criteria were applied to the data received and are outlined below:

Overseas InvestmentsThe BVCA survey includes all investments ‘made’ or ‘advised by’ the BVCA full member firm, ‘regardless of whether the investing fund is UK or overseas-based’. This means that the figures relate to investments undertaken by BVCA full member firms based in the UK, and also to those undertaken through an overseas office where the UK office was the lead adviser, regardless of where the investment fund was domiciled. As a result, more cross-border investments have been included in the BVCA data which therefore reflect more accurately the activity of BVCA full members, particularly those that invest through pan-European or global funds.

Industry SectorsThe Industry Classification Benchmark (ICB) is used throughout this report to classify individual company investments by industry and subsector.

Financing StagesThe number of companies in some financing stage categories and their subtotals add up to more than the total number of companies invested in. This is due to some companies receiving more than one investment within the year at different financing stages. For example, if a company receives a round of start-up finance and then further rounds of expansion finance later in the same year, that company will be counted once in each of the start-up and expansion categories (therefore appearing to be counted twice), but only counted as one investment in the overall total. This only affects ‘number of companies’ not ‘amounts invested’.

Technology ClassificationThere is as yet no universally accepted definition of a ‘technology’ company. For the purposes of this report, investments defined by BVCA member firms as ‘high-tech’ are included in tables 8 and 9.

Cleantech ClassificationCleantech represents a diverse range of products, services and processes which are intended to provide superior performance at lower costs, while greatly reducing or eliminating negative ecological impact, at the same time as improving the productive and responsible use of natural resources. For the purposes of this report, investments defined by BVCA member firms as ‘cleantech’ are included in table 10.

Foreign Currency ConversionWhere BVCA collected investment information in foreign currencies, the amounts were converted into Sterling using the annual average exchange rates for 2012, calculated from figures supplied by the Bank of England.

Private Equity DefinitionsThe term private equity is generally used in Europe to cover the industry as a whole, including both buyouts and venture capital. Venture capital is a subcategory covering the start-up to expansion stages of investment.

Private equity describes equity investments in unquoted companies, often accompanied by the provision of loans and other capital bearing an equity-type risk.


Appendix: Methodology and Definitions

Types of Private Equity Firms

The definitions below need to be interpreted with caution. In recent years, several larger private equity firms that historically invested funds from a single in-house source have begun to raise and manage external sources.

Independents: These can either be firms, funds or investment trusts, either publicly listed or private, which raise their capital from external sources.

Captives: These organisations invest their own money, and/or manage or invest funds on behalf of a parent organisation. In the latter case, the private equity firm would be a wholly owned subsidiary or division of the parent, usually a financial institution.

Semi-captives: These organisations invest funds on behalf of a parent company, or their own funds, in addition to investing funds raised within the last five years from external sources.

Stages of Investment

Seed: Financing that allows a business concept to be developed, perhaps involving the production of a business plan, prototypes and additional research, prior to bringing a product to market and commencing large-scale manufacturing.

Start-up: Financing provided to companies for use in product development and initial marketing. Companies may be in the process of being setup or may have been in business for a short time, but have not yet sold their product commercially.

Other early stage: Financing provided to companies that have completed the product development stage and require further funds to initiate commercial manufacturing and sales. They may not yet be generating profits.

Late stage venture: Financing provided to companies that have reached a fairly stable growth rate; that is, not growing as fast as the rates attained in the early stage. These companies may or may not be profitable, but are more likely to be than in previous stages of development.

Expansion: Sometimes known as ‘development’ or ‘growth’ capital, provided for the growth and expansion of an operating company which is trading profitably. Capital may be used to finance increased production capacity, market or product development, and/or to provide additional working capital.

Bridge financing: Financing made available to a company in the period of transition from being privately owned to being publicly quoted.

Replacement capital: Minority stake purchase from another private equity investment organisation or from another shareholder or shareholders.

Refinancing bank debt: Funds provided to enable a company to repay existing bank debt.

PIPE: Private investment in public companies (minority stake only).

Rescue/Turnaround: Financing made available to existing businesses which have experienced trading difficulties, with a view to re-establishing prosperity.

Management buyout (MBO): Funds provided to enable current operating management and investors to acquire an existing product line or business. Institutional buyouts (IBOs), leveraged buyouts (LBOs) and other types of similar financing are included under MBOs for the purposes of this report.

Management buy-in (MBI): Funds provided to enable an external manager or group of managers to buy into a company.

Public to private: Purchase of quoted shares with the purpose of de-listing the company.

Secondary buyout: Purchase of a company from another private equity investment organisation.



Fundraising

The following apply to the fundraising section:

1. Funds managed by UK private equity firms for both UK and overseas investment are included.

2. Funds managed by the overseas headquarters of international private equity firms (which have UK-based offices that are BVCA members) are excluded.

UK Regions

The standard Government Office Region (GORs) classification is used throughout this report to classify the location of individual company investments. The composition of GORs is listed below.

North EastClevelandDurhamNorthumberlandTyne and Wear

East MidlandsDerbyshireLeicestershireLincolnshireNorthamptonshireNottinghamshire

South EastBerkshireBuckinghamshireEast SussexHampshireIsle of WightKentOxfordshireSurreyWest Sussex

North WestCumbriaCheshireGreater ManchesterLancashireMerseyside

West MidlandsHereford and WorcesterShropshireStaffordshireWarwickshireWest Midlands

London

Yorkshire and The HumberHumbersideNorth YorkshireSouth YorkshireWest Yorkshire

East of EnglandCambridgeshireNorfolkSuffolkBedfordshireEssexHertfordshire

South WestAvonCornwallDevonDorsetGloucestershireSomersetWiltshire



Industry classifications

Economic Group Sectors Subsectors

Oil and Gas Oil and gas, Oil and gas producers Oil equipment, services and distribution Alternative energy

Exploration and production, integrated oil and gas. Oil equipment, and services pipelines. Renewable energy equipment, alternative fuels.

Basic Materials Chemicals Forestry and paper Industrial metals and mining Mining Commodity and speciality chemicals. Forestry, paper. Aluminium, non-ferrous metals, iron and steel. Coal, diamonds and gemstones, general mining, gold mining, platinum and precious metals.

Industrials Construction and materials Aerospace and defence General industrials Electronic and electrical equipment Industrial engineering Industrial transportationSupport services

Building materials and fixtures, heavy construction. Aerospace, defence. Containers and packaging, diversified industrials. Electrical components and equipment, electronic equipment. Commercial vehicles and trucks, industrial machinery.Delivery services, marine transportation, railroads, transportation services, trucking.Business support services, business training and employment agencies, financial administration, industrial suppliers, waste and disposal services.


Consumer goods Automobiles and partsBeveragesFood producersHousehold goodsLeisure goodsPersonal goodsTobacco

Automobiles, auto parts, tyres.Brewers, distillers and vintners, soft drinks.Farming and fishing, food products.Durable household products, non-durable household products, furnishings, home construction.Consumer electronics, recreational products, toys.Clothing and accessories, footwear, personal products.Tobacco.

Basic materials ChemicalsForestry and paperIndustrial metalsMining

Commodity and specialty chemicals.Forestry, paper.Aluminium, non-ferrous metals, steel.Coal, diamonds and gemstones, general mining, gold mining, platinum and precious metals.

Healthcare Healthcare equipment and servicesPharmaceuticals and biotechnology

Health care providers, medical equipment, medical supplies.Biotechnology, pharmaceuticals.

Consumer Services Food and drug retailers General retailers Media Travel and leisure

Drug retailers, food retailers and wholesalers.Apparel retailers, broadline retailers, home improvement retailers, specialised consumer services, specialty retailers.Broadcasting and entertainment, media agencies, publishing.Airlines, gambling, hotels, recreational services, restaurants and bars, travel and tourism.


Telecommunications Fixed-line telecommunications Mobile telecommunications

Fixed-line telecommunications.Mobile telecommunications.

Utilities Electricity Gas, water and multi-utilities

Electricity.Gas distribution, multiutilities, water.

Financials BanksNon-life insuranceLife insuranceReal estateGeneral financialEquity investment instrumentsNon-equity investment instruments

Banks.Full line insurance, insurance brokers, property and casualty insurance, reinsurance.Life insurance.Real estate holding and development, real estate investment trusts.Asset managers, consumer finance, specialty finance, investment services, mortgage finance.Equity investment instruments.Non-equity investment instruments.

Technology Software and computer servicesTechnology hardware and equipment

Computer services, internet, software. Computer hardware, electronic office equipment, semiconductors, telecommunications equipment.

Disclaimer

The data provided has been collected from different sources. BVCA has taken steps to ensure the reliability of the information presented. However, BVCA cannot guarantee the ultimate accuracy of the data and therefore BVCA does not accept responsibility for any decision made or action taken based on the information provided.



For further information contact the BVCA

British Private Equity & Venture Capital Association

5th Floor East, Chancery House, 53-64 Chancery Lane, London WC2A 1QS T +44 (0)20 7492 0400 [email protected] www.bvca.co.uk

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