Foreign investors dominate private equity funding of UK firms, data shows

Foreign firms are buying the biggest stakes in UK businesses, despite there being more private equity deals struck on British soil, new data shows.

Some £3.5 billion was invested in businesses across the UK through private equity between May and July, according to analysis from Barclays and data firm Beauhurst.

This was about 3% higher than the previous three-month period.

Private equity is when a fund invests in a company in return for a controlling share of that firm.

Across the first half of 2024, just under a 10th of deals struck with UK firms involved a foreign investor.

However, these deals accounted for about 60% of the total amount invested over the period, the analysis found.

It indicates that foreign investors are more likely to be behind the highest-value funding for British businesses, even though the majority of deals involve UK investors.

Shenal Kakad, head of private markets for Barclays Private Bank, said that “companies are staying private for longer”, prompting investors to turn to private equity to access more opportunities in recent years.

“Historically the UK has been a major player in private market activity in Europe and we expect this trend to continue,” she said.

Between May and July, the north west of England saw the highest growth in equity funding largely due to Cheshire-based environmental consultancy RSK Group securing £500 million worth of investment from a consortium of funds.

The data comes at a time of greater scrutiny on the private equity market.

The Bank of England has been reviewing the sector and the potential risks it poses to financial stability in the UK, having grown rapidly in recent years and become a major source of funding for businesses alongside bank loans.

Major supermarkets Asda and Morrisons are private equity-owned, while recently announced deals include US private equity firm Apollo Global Management’s takeover of British parcel delivery company Evri for £2.7 billion.

Wagamama owner The Restaurant Group was also bought by Apollo last year, while earlier this year US private equity group Thoma Bravo struck an almost £4.3 billion deal to take UK cybersecurity firm Darktrace private.

Meanwhile, Barclays research showed that there were some 5.4 million companies registered in the UK as of July, about 300,000 more than the same time last year.

Hannah Bernard, head of business banking at Barclays, said the increase shows companies were “becoming more resilient, agile and adaptable to change”.

This comes alongside “wider support for strategically important industries like technology, advanced manufacturing and life sciences”, which is a “recipe for growth”, Ms Bernard said.