Private equity generates £5.4 billion for UK financial services

Source: Exec Digital UK

Date :22/01/2008 09:25:14

Report by the British Private Equity and Venture Capital Association (BVCA) outlines importance of the UK's private equity industry.

According to the report, during 2006, the UK’s financial and professional services firms generated an estimated £5.4 billion in revenue through the provision of services to the private equity community, accounting for around twelve percent of the total annual turnover of the UK financial services industry.

Following two decades of strong growth, the UK private equity industry, one of the largest globally, is playing an increasingly significant role as a revenue generator within the financial and professional services industries, the BVCA said.

BVCA chief executive Simon Walker said: "This report shows just how important the private equity industry is to the UK economy and the financial services industry.”

"We are part of the economic mainstream."

Over the past six years, private equity and venture capital funds have raised over £95 billion of capital for investment in unquoted businesses, £34 billion of this in 2006 alone.

Industry criticism

The report, unveiled on Monday night at the London Stock Exchange is part of the private equity industry’s effort to fight back against criticism they received last year after bidding for some of the UK’s best-known companies, led to cries of asset-stripping, tax-dodging and job-cutting.

The government reacted by increasing the base rate of capital gains tax from ten percent to 18 percent, saying it would make private equity pay a fairer share of tax.

In response Sir David Walker, a former Morgan Stanley executive, was appointed by the British Private Equity and Venture Capital Association to make recommendations about corporate governance which could form the basis of a voluntary code of conduct, resulting in more transparency and disclosure.

The researchers surveyed more than 250 BVCA members and associate members, including private equity and venture capital houses, secondary investors and financial and professional services firms.

January 22, 2008