Venture Capital Report on
Investment Activity 2014
Autumn 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%
Summary
3
Data Tables
4
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.
Data Tables
1
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 2,23613,363 28 24 22 25 100
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 8 7 2 5 5 1 1 11 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 27 29 51 16 19 26 386 374 1,081 4 6 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 3
2 0 2 1 0 878 448 0 10 7 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 0.5
3. 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
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 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 Private
14 0 0 2 0 0 164 0 0 3 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 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 0.5
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) 5 7 2 56 100 29 11 161 7 9 100 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 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. 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 Private 11,741 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.
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 0
3 3 0 - - 0 1 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 3 Financials - Non-Life Insurance
9 9 1 1 69 57 1 1 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 0.5
2. 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
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 Telecommunications
6 8 5 2 2 1 4 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 0.5
2. 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 StageEarly Expansion Replacement Capital MBO/MBI Other Total Mobile Telecommunications
3 3 0 0 0 6 1 4 0 0 0 4 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 20 3 0 30 29 14 0 Other Electronics 14 3 2 3 6 1 Biotechnology 28 5 0 0 21 2 0 0 Medical: Medical Equipment 23 3 0 0 0 184 10 6 0 0 0 806 Pharmaceuticals 15 0 2 0 9 0 52 0 Health Care 13 2 0 11 9 7 0 17 Other 60 32 3 20 33 70 15 578 Total 251 76 6 30 13 376 129 134 29 897 18 1,207 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 0.5
Table 10. Investment in ‘Cleantech’ Companies by Stage (UK)
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 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 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. 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 units Number of private equity backed companies Companies 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)
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 20122014 2013 2012 2014 2013 20122014 2013 2012 2014 2013 20122014 2013 2012 2014 2013 20122014 2013 2012 2014 2013 20122014 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 32106 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 8 East of England 22 22 20 7 6 5 7 13 14 3 6 5 3 5 4 8 10 9 7 4 5 7 5 5 2 3 4 8 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 6 9 5 15 18 11 8 15 14 8 18 14 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 20 Wales 31 22 24 10 6 6 7 5 6 3 2 2 0 2 0 5 7 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 235226 296 100 100 100 40 50 44100 100 100 106 82 100100 100 100 53 38 25100 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 0.5
3. 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)
Region Venture capital Expansion Replacement capital MBO/MBI Other stage Amount (£m) % Amount (£m) % Amount (£m) % Amount (£m) % Amount (£m) %
2014 2013 20122014 2013 20122014 2013 20122014 2013 20122014 2013 20122014 2013 20122014 2013 20122014 2013 20122014 2013 20122014 2013 2012 London 71 100 126 24 34 37 308 254 394 36 37 27 44 400 85 14 38 81,670768 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 93114 182 32 38 53 527 377 754 61 55 51 78 494 898 25 46 791,958 931 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 1 29 29103 9 3 9 242126 288 8 7 11 7 6 3 3 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 3 116 84 30 38 8 3 210 110 477 7 6 18 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 25 Wales 12 7 9 4 2 3 16 24 9 2 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 3051,064 1,133 100 100 1002,9801,840 2,677 100 100 100276 223 143 100 100 100 1. – indicates a value greater than 0 but less than 0.5
Table 15. 2014 Industry Sector Analysis by Region (UK) – Number of Companies
Region Oil & gas, basicmaterials & industrials
Consumer
goods & consumer Health care 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 11 4 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, basicmaterials & industrials
Consumer
goods & consumer Health care 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 20 27 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 1. – indicates a value greater than 0 but less than 0.5
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 0.5
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 Islands
2. – 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 1. – indicates a value greater than 0 but less than 0.5
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
Appendix
Methodology and Definitions
In 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 Investments
The 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 Sectors
The Industry Classification Benchmark (ICB) is used throughout this report to classify
individual company investments by industry and subsector.
Financing Stages
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. 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 Classification
There 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 Classification
Cleantech 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 Conversion
Where 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 Definitions
The 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.
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.
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 East
Cleveland
Durham
Northumberland
Tyne and Wear
East Midlands
Derbyshire
Leicestershire
Lincolnshire
Northamptonshire
Nottinghamshire
South East
Berkshire
Buckinghamshire
East Sussex
Hampshire
Isle of Wight
Kent
Oxfordshire
Surrey
West Sussex
North West
Cumbria
Cheshire
Greater Manchester
Lancashire
Merseyside
West Midlands
Hereford and Worcester
Shropshire
Staffordshire
Warwickshire
West Midlands
London
Yorkshire and The Humber
Humberside
North Yorkshire
South Yorkshire
West Yorkshire
East of England
Cambridgeshire
Norfolk
Suffolk
Bedfordshire
Essex
Hertfordshire
South West
Avon
Cornwall
Devon
Dorset
Gloucestershire
Somerset
Wiltshire
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 transportation Support 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. Economic Group Sectors Subsectors
Consumer goods Automobiles and parts Beverages Food producers Household goods Leisure goods Personal goods Tobacco
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 Chemicals Forestry and paper Industrial metals Mining
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 services Pharmaceuticals 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.
Economic Group Sectors Subsectors Telecommunications Fixed-line telecommunications
Mobile telecommunications Fixed-line telecommunications.Mobile telecommunications. Utilities Electricity
Gas, water and multi-utilities Electricity.Gas distribution, multiutilities, water. Financials Banks
Non-life insurance Life insurance Real estate General financial
Equity investment instruments Non-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 services
Technology hardware and equipment
Computer services, internet, software. Computer hardware, electronic office equipment, semiconductors, telecommunications equipment.
