BVCA Private Equity and Venture Capital Report on Investment … Acti… · BVCA Private Equity and Venture Capital Report on Investment Activity 2016 5 Data tables. Table 5a. MBOs

BVCA Private Equity and Venture Capital Report on Investment Activity 2016Summer 2017

ConsumerServices

2,922

Financials

611

Industrials

1,224

Technology

582

Consumer Goods

715

HealthCare

869

AmountInvested

(£m)

Contents

Summary 3

Data Tables 4

Appendix Methodology and Defi nitions 14

BVCA Private Equity and Venture Capital Report on Investment Activity 2016 3

Summary

Summary

The UK’s decision to leave the European Union and the outcome of the 2016 US elections have brought about a wave of uncertainty that continues to be felt across the entirety of the financial services industry. Despite the deep political rifts exposed both at home and abroad, the UK’s private equity and venture capital industry has continued to demonstrate its strength in the face of instability, with global investment by BVCA members at its highest level since the financial crisis, and the greatest amount divested in the industry since the BVCA began collecting data.

Brexit has not yet impacted global investment, which has increased steadily by over £4.5bn since 2015 across all geographies surveyed. On a quarterly basis, there has been little deviation in investments following the referendum, remaining steady at £5.9bn in Q1 and £5.8bn in Q4. Growth capital investment in the UK has increased substantially, growing from £993m in 2015 to just under £1.7bn this year. While UK VC investment dropped to £246m, VC represented 41% of all companies receiving PE/VC investment by BVCA members. The trend towards increased global VC investment also continued, nearly tripling from £104m in 2015 to £302m in 2016.

While London and the South East continue to dominate the investment landscape with more than £3.4bn invested, there has been a notable increase across the rest of the UK, with investment outside London and the South East making up 52% of total UK investment. The West Midlands experienced the most significant surge, with investments increasing from £288m in 2015 to just under £1.2bn in 2016. Investments in the East of England more than doubled to £781m while the South West and North East also saw substantial growth, nearly doubling to £508m and £70m, respectively.

There has been a notable drop in global fundraising by BVCA members, nearly halving from £12bn last year to just over £6.1bn this year. This is not unexpected, however, given the fall of the pound post-referendum, with firms seeking to develop their existing portfolio companies and deploy their accumulated dry powder. Another caveat to this figure is that this does not include a number of large global members who have completed successful fundraisings in 2016 but were not able to hypothecate this out to their UK office.

Conversely, there has been a marginal increase in fundraising from UK investors to £2.7bn, with UK pension funds raising the most money for the asset class since the financial crisis at £839m. The trend towards increased pension fund allocation is not just concentrated in the UK, representing a third of all global fundraising in 2016 at just under £2bn. This demonstrates that despite the overall fall in fundraising, the asset class continues to attract large institutional investors who recognise the potential for solid returns.

Another striking trend for 2016 was the record £29bn divested, exceeding the £21.6bn divested in 2014 as firms continue to return value to their investors. The most active exit route in 2016 was the sale of quoted equity post flotation at £12.3bn, followed by trade sales and sales to other private equity firms. The IPO market has also shown its continued strength, with flotations at their highest levels at £3.1bn.

With regards to investment by industry sector, 2016 saw consumer services more than double to £2.9bn, with health care also seeing similar increases at £869m. While high-tech investments decreased marginally to £916m in 2016, biotechnology has experienced an unprecedented surge, growing from £12m in 2015 to £200m this year.

While there is no doubt the industry will continue to be faced with the challenges of political uncertainty that lie ahead, private equity and venture capital has demonstrated its capacity to adapt to difficult times – a strength that is reassuring for the future. Enhanced portfolio management and operational improvements will be more important than ever as the industry continues to transform businesses, create employment and deliver returns.

Noelle Buckley, Director, Research

Nastasja Vojvodic, Research Manager

Data Tables1

Table 1. Global Investment Activity of BVCA Members

2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

Number of eligible BVCA members 133 137 137 159 166 183 194 193 208 214 192 179 168

% of survey respondents 98 93 96 96 96 97 97 100 99 100 100 100 100

Total amount invested (£m) 21,424 16,919 13,363 10,127 12,288 18,610 20,447 12,629 20,025 31,634 21,853 11,676 9,679

Number of companies financed 925 965 891 857 1,009 1,048 1,073 976 1,672 1,680 1,630 1,535 1,566

Table 2a. Investment by Country

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

2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

UK 728 795 728 79 82 82 7,119 5,990 4,720 33 35 35

US 53 57 43 6 6 5 3,331 2,408 1,634 16 14 12

Europe 128 99 104 14 10 12 9,952 7,584 6,404 46 45 48

Rest of World 16 14 16 2 1 2 1,023 937 606 5 6 5

Total 925 965 891 100 100 100 21,424 16,919 13,363 100 100 100

Table 2b. 2016 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 183 192 177 176 728 25 26 24 24 100 2,264 2,140 1,264 1,451 7,119 32 30 18 20 100

US 12 12 13 16 53 23 23 25 30 100 1,249 478 489 1,115 3,331 37 14 15 33 100

Europe 27 33 32 36 128 21 26 25 28 100 2,328 2,456 2,707 2,461 9,952 23 25 27 25 100

Rest of World 3 8 1 4 16 19 50 6 25 100 27 212 2 783 1,023 3 21 0 77 100

Total 225 245 223 232 925 24 26 24 25 100 5,867 5,286 4,461 5,809 21,424 27 25 21 27 100

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 2016

Data tables

Table 3. Overseas Investment by Financing Stage

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

2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

Seed 61

8 31

5 40

1 00

0

Start-up 3 3 1 2 1 3 0 0

Early Stage 21 21 22 10 12 13 39 59 32 0 1 0

Later stage VC 20 22 16 10 13 10 259 45 50 2 0 1

Total Venture Capital 50 44 49 25 26 29 302 104 85 2 1 1

Expansion/Growth Capital 45 34 27 22 20 16 1,551 989 386 11 9 4

Bridge Financing 2 2 5 1 1 3 1 2 3 0 0 0

Total Expansion 47 36 32 23 21 19 1,553 990 389 11 9 5

Replacement Capital

20 21

3

10 12

2

4,281 2,078

22

30 19

0

Secondary Buyout 10 6 1,398 16

PIPE 0 0 0 0

Refinancing Bank Debt 2 2 0 1 1 0 20 81 0 0 1 0

Total Replacement Capital 22 23 13 11 13 8 4,300 2,159 1,420 30 20 16

Management buyout (MBO) 4854

50 2431

30 5,9576,491

4,839 4259

56

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

Total MBO/MBI 48 54 52 24 31 31 5,957 6,491 5,149 42 59 60

Public to Private 22

3 11

2 215436

878 24

10

Rescue/Turnaround 2 2 1 1 102 3 1 0

Other 31 13 17 15 8 10 1,876 749 718 13 7 8

Total Other Late Stage 35 15 22 17 9 13 2,194 1,185 1,600 15 11 19

Total 197 170 163 100 100 100 14,305 10,929 8,643 100 100 100

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


2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

Seed 49 19 24 6 2 3 15 16 6 0 0 0

Start-up 50 76 63 7 9 8 47 83 22 1 1 0

Early Stage 145 179 171 19 22 23 112 126 80 2 2 2

Later stage VC 68 59 62 9 7 8 72 119 185 1 2 4

Total Venture Capital 312 322 315 41 40 42 246 344 293 3 6 6

Expansion/Growth Capital 279 312 228 37 38 31 1,673 993 850 24 17 18

Bridge Financing 5 5 7 1 1 1 17 2 15 0 0 0

Total Expansion 284 315 234 38 39 31 1,690 995 865 24 17 18

Replacement Capital 20 11 21 3 1 3 220 32 105 3 1 2

Secondary Buyout 20 25 14 3 3 2 2,373 1,775 192 33 30 4

PIPE7 1

01 0

035 0

00 0

0

Refinancing Bank Debt 5 1 8 0

Total Replacement Capital 47 37 40 6 5 5 2,627 1,807 305 37 30 6

Management buyout (MBO) 65 66 97 9 8 13 2,152 2,033 2,863 30 34 61

Management buy-in (MBI) 3 3 9 0 0 1 13 35 117 0 1 2

Total MBO/MBI 68 69 106 9 8 14 2,164 2,068 2,980 30 35 63

Public to Private 0 214

0 02

0 201164

0 33

Rescue/Turnaround 16 33 2 4 102 374 1 6

Other 28 35 39 4 4 5 289 201 112 4 3 2

Total Other Late Stage 44 70 52 6 9 7 391 777 276 5 13 6

Total 728 795 728 100 100 100 7,119 5,990 4,720 100 100 100


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

2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

Small (<£10m) 17 23 47 26 35 48 59 83 184 3 4 6

Mid-sized (£10m - £100m) 43 37 40 66 56 41 1,195 1,050 1,219 56 52 43

Large (>£100m) 5 6 10 8 9 10 897 901 1,461 42 44 51

Total 65 64 97 100 100 100 2,152 2,033 2,863 100 100 100

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

2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

Small (<£10m) 33

5 100100

56 1335

11 100100

9

Mid-sized (£10m - £100m) 0 4 0 44 0 107 0 91

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

Total 3 3 9 100 100 100 13 35 117 100 100 100


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

2016 2015 2014

Seed 300 846 260

Start-up 935 1,088 352

Early Stage 772 702 466

Later stage VC 1,066 2,024 2,977

Total Early Stage 788 1,032 914

Expansion/Growth Capital 5,997 3,183 3,730

Bridge financing 3,302 341 2,151

Total Expansion 5,950 3,139 3,683

Replacement Capital 10,977 2,878 5,007

Secondary Buyout 118,629 70,982 13,704

PIPE9,953 500

0

Refinancing Bank Debt 1,667

Total Replacement Capital 55,903 48,830 7,633

Management buyout(MBO) 33,101 30,808 29,516

Management buy-in(MBI) 4,272 11,616 13,016

Total MBO/MBI 31,829 29,974 28,115

Public to Private 0 100,58411,742

Rescue/Turnaround 6,361 11,337

Other 10,331 5,751 2,871

Total Other Late Stage 8,888 11,094 5,214

Total 9,429 7,252 6,260

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

2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

Basic Materials - Chemicals 7 8 7 1 1 1 8 16 5 0 0 0

Basic Materials - Forestry & Paper

1 3

0

0 0

0

6 0

0

0 0

0

Basic Materials - Industrial Metals & Mining 0 0 0 0

Basic Materials - Mining 0 0 0 0

Total Basic Materials 8 11 7 1 1 1 14 16 5 0 0 0

Consumer Goods - Beverages11

3 52

0 166

2 811

0 2

Consumer Goods - Food Producers 9 7 1 1 94 17 2 0

Consumer Goods - Household Goods & Home Construction 14 16 16 2 2 2 82 168 74 1 3 2

Consumer Goods - Automobiles & Parts 7 9 13 1 1 2 32 20 91 0 0 2

Consumer Goods - Leisure Goods 8 23 15 1 3 2 86 246 96 1 4 2

Consumer Goods - Personal Goods19

17 223

2 3449

87 2816

1 6

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

Total Consumer Goods 59 77 78 8 10 11 715 617 640 10 10 14

Consumer Services - Food & Drug Retailers 8 13 7 1 2 1 161 332 19 2 6 0

Consumer Services - General Retailers 46 15 23 6 2 3 2,111 194 203 30 3 4

Consumer Services - Media 23 18 12 3 2 2 310 167 327 4 3 7

Consumer Services - Travel & Leisure 35 29 29 5 4 4 339 497 357 5 8 8

Total Consumer Services 112 75 71 15 9 10 2,922 1,191 906 41 20 19

Financials - Financial Services 21 28 26 3 4 4 404 525 966 6 9 20

Financials - Banks 3 0 0 0 0 0 67 0 0 1 0 0

Financials - Life Insurance 0 2 0 0 0 0 0 112 0 0 2 0

Financials - Non-Life Insurance 8 89

1 11

133 17669

2 31

Financials - Equity Investment Instruments 0 0 0 0 0 0 0 0

Financials - Non-equity Investment Instruments 0 0 0 0 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 5 17 11 1 2 2 7 168 36 0 3 1

Total Financials 37 55 46 5 7 6 611 981 1,070 9 16 23

Health Care - Equipment & Services 59 56 76 8 7 10 538 181 370 8 3 8

Health Care - Pharmaceuticals & Biotechnology 63 64 58 9 8 8 331 88 72 5 1 2

Total Health Care 122 120 134 17 15 18 869 268 442 12 4 9

Industrials - Aerospace & Defense 2 6 6 0 1 1 49 103 8 1 2 0

Industrials - Construction & Materials 18 15 7 2 2 1 119 300 45 2 5 1

Industrials - Electronic & Electrical Equipment 15 20 25 2 3 3 21 38 27 0 1 1

Industrials - Engineering 13 10 11 2 1 2 95 39 66 1 1 1

Industrials - General Industrials 6 16 19 1 2 3 53 14 81 1 0 2

Industrials - Support Services 64 48 43 9 6 6 668 280 271 9 5 6

Industrials - Transportation 8 6 7 1 1 1 219 78 37 3 1 1

Total Industrials 126 121 118 17 15 16 1,224 852 535 17 14 11

Oil & Gas - Alternative Energy 14 11 7 2 1 1 11 8 8 0 0 0

Oil & Gas - Oil & Gas Producers 4 0 2 1 0 0 10 0 11 0 0 0

Oil & Gas - Oil Equipment, Services & Distribution 13 12 20 2 2 3 45 40 172 1 1 4

Total Oil & Gas 31 23 29 4 3 4 65 48 190 1 1 4

Technology - Hardware & Equipment 17 19 24 2 2 3 82 32 101 1 1 2

Technology - Software & Computer Services 197 189 155 27 24 21 500 693 470 7 12 10

Total Technology 214 208 179 29 26 25 582 726 572 8 12 12

Telecommunications - Fixed Line 6 3 5 1 0 1 37 14 18 1 0 0

Telecommunications - Mobile 8 11 7 1 1 1 57 36 11 1 1 0

Total Telecommunications 14 14 12 2 2 2 94 50 29 1 1 1

Utilities - Electricity 2 6 3 0 1 0 11 62 3 0 1 0

Utilities - Gas, Water & Multiutilities 3 2 4 0 0 1 10 1 34 0 0 1

Total Utilities 5 8 7 1 1 1 21 64 37 0 1 1

Other 0 83 47 0 10 6 0 1,177 292 0 20 6

Total 728 795 728 100 100 100 7,119 5,990 4,720 100 100 100

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

2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

Mobile Telecommunications5

66 1

22 29

44 4

00

Fixed Line Telecommunications 0 0 0 0

Computer:

Computer Hardware 3 4 2 1 1 1 0 1 1 0 0 0

Internet 19 22 29 5 6 8 11 17 42 1 2 3

Semiconductors 3 4 9 1 1 2 4 2 3 0 0 0

Software 125 112 88 36 32 24 229 504 312 25 54 26

Other Electronics 11 12 19 3 3 5 3 3 16 0 0 1

Biotechnology 27 23 33 8 6 9 200 12 23 22 1 2

Medical:

Medical Equipment 20 13 24 6 4 7 19 10 12 2 1 1

Pharmaceuticals 26 28 16 7 8 4 33 67 38 4 7 3

Health Care 11 17 17 3 5 5 10 47 44 1 5 4

Other 99 113 123 28 32 34 377 265 712 41 28 59

Total 349 354 366 100 100 100 916 930 1,207 100 100 100

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

Table 9. 2016 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 Telecommunications 31 1

0 0 0 35 22

0 0 24

Fixed Line Telecommunications 0 0 0 0 0 0 0 5

Computer:

Computer Hardware 41

0 01

0 00

0 00

0

Internet 18 0 0 0 10 0 0 11

Semiconductors 4 0 0 01

0 4 0 0 00

4

Software 95 31 3 4 0 58 69 23 79 229

Other Electronics 8 31

0 0 0 1 2167

0 0 3

Biotechnology 20 5 0 2 0 25 8 0 0 200

Medical:

Medical Equipment 18

29 1 1 1

0 8

3 5 11

0 19

Pharmaceuticals 26 0 280

33

Health Care 11 0 8 11

Other 54 27 2 9 8 0 35 125 48 106 65 377

Total 261 70 8 14 13 0 178 212 264 196 66 916


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)


2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

Venture 39 52 60 67 55 54 30 34 31 44 11 5

Expansion12 33

2521 35

2217 86

2526 27

4

Replacement Capital 2 2 6 1

MBO/MBI 2 4 17 3 4 15 5 82 556 7 26 89

Other 5 6 8 9 6 7 15 114 5 22 36 1

Total 58 93 112 100 100 100 67 316 624 100 100 100


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

2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

London 204 208 173 28 26 24 2,723 2,459 2,145 38 41 45

South East 115 114 114 16 14 16 686 812 578 10 14 12

South East & London 319 322 287 44 41 39 3,409 3,272 2,723 48 55 58

South West 48 47 50 7 6 7 508 259 233 7 4 5

East of England 34 36 29 5 5 4 781 366 48 11 6 1

West Midlands 41 66 57 6 8 8 1,185 288 336 17 5 7

East Midlands 23 26 23 3 3 3 294 359 249 4 6 5

Yorkshire & The Humber 38 47 53 5 6 7 150 770 397 2 13 8

North West 78 91 75 11 11 10 539 424 448 8 7 10

North East 19 27 30 3 3 4 70 38 12 1 1 0

Scotland 58 72 61 8 9 8 131 138 206 2 2 4

Wales 50 40 47 7 5 6 49 55 51 1 1 1

Northern Ireland 20 21 16 3 3 2 2 20 16 0 0 0

Total 728 795 728 100 100 100 7,119 5,990 4,720 100 100 100

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 companies Number of private equity

backed companiesCompanies invested in per 1,000 VAT

registered local units

2016 2015 2014 2016 2015 2014 2016 2015 2014

London 537,145 505,140 461,025 204 208 173 0.38 0.41 0.38

South East 452,705 438,890 413,525 115 114 114 0.25 0.26 0.28

South East & London 989,850 944,030 874,550 319 322 287 0.32 0.34 0.33

South West 267,460 261,735 247,965 48 47 50 0.18 0.18 0.20

East of England 292,955 282,455 266,275 34 36 29 0.12 0.13 0.11

West Midlands 237,340 228,555 215,680 41 66 57 0.17 0.29 0.26

East Midlands 202,045 194,270 181,115 23 26 23 0.11 0.13 0.13

Yorkshire & The Humber 214,225 208,790 192,605 38 47 53 0.18 0.23 0.28

North West 294,205 285,460 265,975 78 91 75 0.27 0.32 0.28

North East 86,385 84,530 78,205 19 27 30 0.22 0.32 0.38

Scotland 218,470 214,835 203,755 58 72 61 0.27 0.34 0.30

Wales 122,820 120,825 113,215 50 40 47 0.41 0.33 0.42

Northern Ireland 84,305 82,075 81,900 20 21 16 0.24 0.26 0.20

Total 3,010,060 2,907,560 2,721,240 728 795 728 0.24 0.27 0.27

Source for 2014/15/16: ‘UK Business: Activity, Size and Location - [2014/2015/2016]’ (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 %2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

London 89 98 64 29 29 20 66 62 56 23 20 24 20 8 10 43 22 25 24 20 36 35 29 34 13 27 11 30 39 21

South East 54 50 42 17 15 13 45 51 50 16 16 21 5 7 8 11 19 20 9 10 18 13 14 17 4 6 5 9 9 9

South East & London 143 148 106 46 44 33 111 113 106 39 36 45 25 15 18 53 41 45 33 30 54 49 43 51 17 33 16 39 47 30

South West 16 7 11 5 2 3 25 31 27 9 10 11 2 24

4 510

5 37

7 47

3 5 5 7 7 9

East of England 25 19 22 8 6 7 6 8 7 2 3 3 3 5 6 14 0 2 0 3 2 3 2 5 4 4

West Midlands 12 24 27 4 7 8 20 28 20 7 9 9 2 3 2 4 8 5 5 7 6 7 10 6 2 7 4 5 10 8

East Midlands 3 4 9 1 1 3 7 7 6 2 2 3 3 6 2 6 16 5 7 5 5 10 7 5 3 7 2 7 10 4

Yorkshire & The Humber 17 15 25 5 5 8 10 17 12 4 5 5 36

5 616

13 5 9 9 7 13 8 4 7 5 9 10 9

North West 9 32 28 3 10 9 55 42 26 19 13 117

615

15 9 78

13 108

3 7 8 7 10 15

North East 10 13 24 3 4 8 5 14 5 2 4 2 0 0 0 0 0 0 0 0 4 0 0 9 0 0

Scotland 25 27 24 8 8 8 27 44 19 10 14 8 2 0 2 4 0 5

4

2 10

5

3 9

6

0 6

13

0 11

Wales 32 23 31 10 7 1018

137 6

43

0 01

0 03 4 7 6 7 1

51

9

Northern Ireland 20 21 13 6 6 4 0 0 0 0 0 0 0 0

Total 312 333 320 100 100 100 284 317 235 100 100 100 47 37 40 100 100 100 68 69 106 100 100 100 44 70 53 100 100 100


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) %2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014

London 102 219 71 41 64 24 742 332 308 44 33 36 438 687 44 17 38 14 1,309 769 1,670 60 37 56 132 452 53 34 58 19

South East 58 46 22 24 13 8 229 146 219 14 15 25 60 330 34 2 18 11 315 224 288 15 11 10 24 66 15 6 8 5

South East & London 160 265 93 65 77 32 971 478 527 57 48 61 498 1,016 78 19 56 25 1,624 993 1,958 75 48 66 155 518 68 40 67 25

South West 12 8 23 5 2 8 159 76 50 9 8 6 172 497

7 32

67 121150

3 6 5 98 5 19 25 1 7

East of England 23 16 14 9 5 5 46 20 10 3 2 1 689 277 26 15 0 43 0 2 23 11 7 6 1 3

West Midlands 4 10 5 2 3 2 79 91 58 5 9 7 1,031 1 29 39 0 9 68 155 226 3 7 8 4 31 18 1 4 6

East Midlands 1 1 4 0 0 2 38 14 10 2 1 1 51 231 10 2 13 3 199 56 223 9 3 7 6 57 2 1 7 1

Yorkshire & The Humber 7 6 70 3 2 24 57 31 27 3 3 3 24231

58 113

19 42 513 97 2 25 3 19 78 144 5 10 52

North West 12 11 9 5 3 3 248 148 105 15 15 12150

1166

38 111 99210

5 5 7 18 76 9 5 10 3

North East 4 5 7 2 1 2 10 33 5 1 3 1 0 0 0 0 0 0 0 0 56 0 0 14 0 0

Scotland 12 11 53 5 3 18 68 96 57 4 10 7 13 0 7 0 0 2

54

32 85

2

2 3

0

0 4

3

0 2

Wales 9 9 12 4 3 413

716 1

12

0 00

0 00 57 31 3 1 0

60

2

Northern Ireland 2 3 2 1 1 1 0 0 0 0 0 0 0 0

Total 246 344 293 100 100 100 1,690 995 865 100 100 100 2,627 1,807 305 100 100 100 2,164 2,068 2,980 100 100 100 391 777 276 100 100 100



Data tables

Table 15. 2016 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 29 18 21 36 69 29 19 34 66 31 0 0

South East 28 17 4 7 45 19 9 16 29 14 0 0

South East & London 57 35 25 42 114 49 28 50 95 44 0 0

South West 13 8 3 5 20 9 4 7 8 4 0 0

East of England 6 4 0 0 12 5 2 4 14 7 0 0

West Midlands 15 9 6 10 12 5 3 5 5 2 0 0

East Midlands 9 5 4 7 4 2 2 4 4 2 0 0

Yorkshire and The Humber 12 7 4 7 9 4 5 9 8 4 0 0

North West 22 1312 21

26 11 5 9 14 7 0 0

North East 7 4 5 2 3 5 3 1 0 0

Scotland 17 10 4 7 8 3 3 5 26 12 0 0

Wales 5 31 2

21 91 2

23 11 0 0

Northern Ireland 2 1 3 1 14 7 0 0

Total 165 100 59 100 234 100 56 100 214 100 0 0

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

Table 16. 2016 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) %

Number %

London 549 42 523 73 1,041 27 428 59 182 31 0 0

South East 141 11 4 1 312 8 51 7 178 31 0 0

South East & London 691 53 527 74 1,352 36 479 66 359 62 0 0

South West 93 7 12 2 318 8 72 10 12 2 0 0

East of England 22 2 0 0 726 19 24 3 8 1 0 0

West Midlands 102 8 3 - 1,038 27 13 2 30 5 0 0

East Midlands 95 7 39 5 87 2 22 3 51 9 0 0

Yorkshire and The Humber 57 4 23 3 34 1 13 2 24 4 0 0

North West 198 1566 9

170 4 36 5 72 12 0 0

North East 6 - 11 - 49 7 1 - 0 0

Scotland 37 3 45 6 22 1 12 2 15 3 0 0

Wales 2 -- -

33 17

1 7 1 0 0

Northern Ireland - - 1 - 0 1 - 0 0

Total 1,304 100 715 100 3,791 100 726 100 582 100 0 0



Data tables


Data tables

Table 17. UK Investment by type of PE organisation

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

2016 2015 2014 2016 2015 2014

Organisations which manage third-party funds (Independents) 5,800 4,262 2,730 81 71 58

Organisations which invest own or parent company money (Captives) 542 367 506 8 6 11

Organisations which do both (Semi-captives) 776 1,361 1,484 11 23 31

Total 7,119 5,990 4,720 100 100 100

Table 18. Funds Raised by Source

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

2016 2015 2014 2016 2015 2014

Pension Funds UK 839 687 305 14 6 3

Overseas 1,154 1,222 2,373 19 10 22

Total 1,993 1,909 2,677 33 16 25

Insurance Companies UK 35 199 54 1 2 -

Overseas 301 819 464 5 7 4

Total 336 1,018 518 5 9 5

Corporate Investors UK 184 373 84 3 3 1

Overseas 37 708 69 1 6 1

Total 220 1,081 154 4 9 1

Banks UK 23 15 0 - - 0

Overseas 51 775 106 1 7 1

Total 74 790 106 1 7 1

Family Offices UK 236 113 147 4 1 1

Overseas 52 409 739 1 3 7

Total 287 521 886 5 4 8

Funds of Funds UK 418 297 280 7 2 3

Overseas 1,254 883 1,288 21 7 12

Total 1,671 1,180 1,568 27 10 14

Government Agencies UK 202 92 8 3 1 -

Overseas 127 194 143 2 2 1

Total 330 286 151 5 2 1

Academic Institutions UK 35 23 77 1 - 1

Overseas 48 49 685 1 - 6

Total 84 73 761 1 1 7

Private Individuals UK 379 315 270 6 3 2

Overseas 31 923 444 1 8 4

Total 411 1,238 714 7 10 7

Capital Markets UK 266 17 1 4 - -

Overseas 0 0 0 0 0 0

Total 266 17 1 4 - -

Sovereign Wealth Funds UK 15 18 0 - - 0

Overseas 154 956 1,000 3 8 9

Total 168 974 1,000 3 8 9

Others UK 47 466 48 1 4 -

Overseas 225 2,359 2,238 4 20 21

Total 273 2,825 2,286 4 24 21

Total UK 2,678 2,614 1,273 44 22 12

Total Overseas 3,434 9,297 9,549 56 78 88

Grand Total 6,112 11,911 10,822 100 100 100

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

2016 2015 2014 2016 2015 2014

UK 2,678 2,614 1,273 44 22 12

France 123 435 116 2 4 1

Germany 163 474 266 3 4 2

Ireland 55 239 0 1 2 0

Netherlands 127 735 616 2 6 6

Sweden 14 344 110 - 3 1

Switzerland 24 705 510 - 6 5

Rest of Europe 536 882 510 9 7 5

United States 1,537 1,970 5,420 25 17 50

Canada 619 203 349 10 2 3

Australia 43 196 97 1 2 1

China 32 238 61 1 2 1

Japan 36 369 125 1 3 1

Middle East 60 1,610 698 1 14 6

Africa 9 0 59 - 0 1

Other 55 897 612 1 8 6

Total 6,112 11,912 10,822 100 100 100

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

2016 2015 2014 2016 2015 2014

Large MBO 1,485 2,799 4,181 24 24 39

Middle MBO 2,430 8,030 5,204 40 67 48

Small MBO 1,721 567 1,149 28 5 11

VC 475 515 288 8 4 3

Generalist 0 0 0 0 0 0

Total 6,110 11,912 10,822 100 100 100


Table 21. 2016 Divestments

Type of divestment Amount divested Number of divestments Number of companies

£m % Number % Number %

Divestment on Flotation (IPO) 3,121 11 24 3 17 3

Repayment of Preference Shares/Loans 778 3 257 27 122 21

Sale of quoted equity post flotation 12,290 42 85 9 55 9

Sale to another Private Equity firm 4,434 15 101 11 81 14

Sale to Financial Institution 380 1 87 9 30 5

Sale to Management (Buy-back) 120 - 45 5 33 6

Trade Sale 4,937 17 203 21 138 24

Write Offs 68 - 44 5 33 6

Others 2,867 10 101 11 70 12

Total 28,994 100 947 100 579 100


Data tables

Appendix Methodology and DefinitionsIn early 2017, BVCA’s Benchmark data collection system collected data on investments made by BVCA private equity and venture capital members during the calendar year 2016. A 98% 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

Documents

BVCA Private Equity and Venture Capital Report on Investment … Acti… · BVCA Private Equity and Venture Capital Report on Investment Activity 2016 5 Data tables. Table 5a. MBOs