Business News Round Up (21/02/2023)
Scottish private equity outperforms rest of UK, with record £3.5 billion spent
Scotland’s mid-market businesses attracted a record amount of private equity during 2022, despite investment dipping across the rest of the UK. KPMG UK analysis showed that over the course of the year, 51 deals involving Scottish firms were completed, worth £3.5bn, reflecting a year-on-year increase in value of 69%, compared with 2021, when 41 deals worth £2bn took place. The year began with significant activity in the first quarter, before economic and geopolitical headwinds gathered pace; although not enough to hamper Scotland’s overall performance. Scotland was the only UK region to record an increase in deal value and volume compared with 2021, also surpassing the pre pandemic record of £2.69bn, which was invested in 2019.Graeme Williams, head of corporate finance M&A for Scotland, explained: “Last year was a tough one for the investment market globally, but it’s no fluke that Scotland bucked the downward trend. Scotland is still vulnerable to global headwinds, but our breadth and depth of mid-market businesses helped provide some welcome cover during a challenging year.” By comparison, across the UK, mid-market deals cooled considerably last year, with £46bn transacting across 680 deals – a drop off of 19% in volume and 12% in value.
https://www.insider.co.uk/news/scottish-private-equity-outperforms-rest-29270088
BGF invests almost £70m in early stage businesses
BGF’s early-stage team invested almost £70m in a range of businesses across the UK and Ireland during 2022, predominantly operating in life sciences, climate and sustainability and deep tech. The £69m total includes £38m of new investments and £31m of follow-on funding dedicated to the existing portfolio. The team also helped its portfolio of early-stage companies raise more than £500m of funding from third party investors. Last year’s investments included Cambridge-based functional genomics platform Enhanc3D Genomics, Aberdeen-based therapeutic biologics company Elasmogen, Reading-based sustainable home energy business Tepeo, Nottingham-based energy storage start-up Cheesecake Energy and London-based IoT cyber security platform Crypto Quantique. The team completed 12 follow-on investments in 2022, including in autonomous vehicle firm Oxbotica, novel hydrogen fuel cell company Bramble Energy, agritech business Arborea and transformational liver transplantation business OrganOx. BGF’s early-stage portfolio is managed by Tim Rea, Dennis Atkinson, and Ian Downing, with 2022 seeing further growth with investor Marta Lozano joining Rowan Bird (climate and sustainability) and Lucy Edwardes Jones (life sciences).
https://www.insidermedia.com/news/national/bgf-invests-almost-70m-in-early-stage-businesses
2023 to see uplift in Scottish commercial property investment
Savills has forecasted that investment in commercial property in Scotland this year will surpass the £2.39 billion that traded last year in a reversal of 2022’s strong start and weak finish. In its latest UK Commercial Market in Minutes the firm suggests low transaction volumes will remain for the first quarter of the year before activity picks up again and more than £54 billion is expected to trade across the UK throughout the year as investors resume buying strategies against improving economic and political stability. The report quantifies average yield movements across sectors with January’s yields a very mixed story, with downward pressure on parts of retail, stability in logistics and softening in prime office yields. Savills says the month’s most interesting bellwether for the future is the stabilisation in prime logistics yields, with the first sign that the pricing plateau has been reached. Savills reports while the short-term occupational outlook for logistics will be affected by a weak consumer economy, the sector came into this growth shock with near record low vacancy rates. Meanwhile in offices, shortages of “prime” and “green” across the board, as is the case in Edinburgh, Glasgow and Aberdeen, will bring stronger rental growth for better quality space.
NW deals volume jumps, but value slumps due to slowdown in higher end market
The North West closed 2022 with a 10-year high in terms of deal volume – up to 946 – although deal values slumped. This volume figure represented a five per cent uplift year on year and the comparison with the previous 10 years is even more favourable, according to the Experian M&A review for 2022. Activity was driven by smaller transactions, which returned a 17% boost in volume and an 8.3% increase in total value, although a slow down at the higher end of the market meant that the recorded value for the bumper crop of deals fell by more than 60% – albeit from the impressively high total value of £21.6bn in 2021 – to £7.9bn last year. Drilling down, the volume of acquisitions in the North West was up by 12% to 668 in total and it remains the most popular type of deal for the region. Growth funding, while more subdued than acquisitions, also experienced a boost, with a two per cent increase to 135 deals. While the more traditional management buyout transaction saw volume decline year on year, employee buyouts remained consistent, suggesting this deal type is gaining the interest of owners of North West based firms as an alternative method of exiting the business.