The UK private equity market staged a modest recovery in H1 2024, with deal value hitting close to £50 billion and strong fundraising performance following a steep decline last year.
Here are four charts from PitchBook’s 2024 UK Private Capital Markets Breakdown for a closer look at the current state of the UK’s PE landscape.
Total deal value for the first six months of the year reached £49.7 billion (around $65.1 billion)—just over half of last year’s total—following the strongest Q2 in two years. So far, the six largest deals of 2024 were all closed in the second quarter.
Large-cap deals are on the rise. Buyouts made up 59.1% of all deals in the first half of 2024, up from 50.6% last year. Deals over £2.5 billion also increased from 25.6% in 2023 to 29.1% of overall deal value.
By contrast, growth and expansion deals, which continued to struggle at the start of the year in a high-interest environment, have decreased their share of deal value. The overall recovery in deal activity is expected to continue in the second half of the year as interest rates decline.
The UK remains a European hub for take-private deals, representing about half of the continent’s H1 activity.
So far, UK PE firms have closed eight take-private deals worth a combined £8.2 billion. Thoma Bravo’s £4.2 billion acquisition of Darktrace in April 2024 was the largest this year.
The UK fundraising momentum seen in 2022 and 2023 has continued, with 2024 on track to be a record year for capital raised. The Bank of England’s lowering of interest rates will also play into this as more capital becomes available.
Over the last few years, the share of capital raised by bucket size has been shifting towards larger vehicles. For example, in 2021, funds above £5 billion collected only 25.1% of committed capital; in 2024, they collected over 70% of capital.
This year, a total of £29.3 billion has been raised across 26 funds—with £20.8 billion of that total, or 71.2%, coming from funds that raised over £5 billion. Two notable mega-funds—Cinven’s $14.5 billion eighth flagship vehicle and Apax’s $12 billion 11th flagship fund—raised two-thirds of H1’s total capital.
UK investors are still struggling for liquidity, with PE exits on track for a third consecutive year of decline.
In the first half of 2024, exit value declined by 71.1% from H2 2023, and by 8.9% from H1 2023. Exits are shifting towards smaller size buckets (under £25 million), with exits above £2.5 billion completely absent in H1. Smaller exits represented nearly half of the total count, the highest proportion of small deals since 2014.
While holding time has slightly decreased compared to last year, the overall trend is still showing sponsors holding assets longer because of unfavorable market conditions.
Compared to pre-pandemic levels, the median holding time is 1.2 years longer in 2024 than it was in 2019.
The uncertain economic outlook and high interest rates in H1 are still slowing down exits in the UK, but as the PE market rebounds, we might see a shift in this trend too.
Featured image by Chunyip Wong/Getty Images
