Buckle up: private equity deals set to return to full strength in Scotland

More than £2 billion worth of deals were seen across Scotland’s private equity market in 2021, but the tally has still not recovered to levels seen before the pandemic.

KMPG's Graeme Williams believes private equity deals could return to pre-pandemic levels this year.

However, after back to back years of disruption, KPMG expects 2022 to be the year when the market finally returns to “full force”.

Figures compiled by the accountancy giant show the 44 investment deals recorded was the largest number in the last five years and a 55 per cent increase on 2020 volumes when 29 deals worth £1.7bn took place. But the £2.1bn value of deals seen in 2021 remains 19 per cent lower than in 2019 when 42 deals worth £2.59bn were transacted.

High profile private equity deals seen during 2021 included a £19.4m fundraising for Dundee-based home delivery service Snappy Shopper led by Glasgow’s Kelvin Capital.

Graeme Williams, director of corporate finance M&A at KPMG UK, said the figures showed the momentum seen at the end of 2020 continued to gather pace into the first half of 2021.

“While activity dipped slightly throughout the rest of the year, the levels maintained were still a record high. In the final quarter of 2021, some clouds began to gather on the horizon, with inflation, supply chain stability, fiscal-monetary policy and COVID-19 variant concerns on the minds of many, however, deals continued to get done.”

The number of private equity exits in Scotland rose from 11 in 2020 to 13 in 2021, also surpassing 2019 levels of exit activity when ten exits took place. Deal values also increased, from £61m in 2020 to £69m in 2021. In 2019, Scottish exits totalled £72.9m.

Williams believes the market could bounce back to be ahead of pre-pandemic levels this year.

“There’s no shortage of high quality Scottish businesses in sought-after sectors, such as technology or those that are tech-enabled, and those in the healthcare and life sciences sector, and this, together with the abundance of private equity money which needs to find a home, means the market should flow this year, and could surpass pre-pandemic levels,” he said.

“Investor appetite is strong and private equity funds remain eager to deploy their ample dry powder, so healthy levels of activity will continue.”

A message from the Editor:Thank you for reading this article. We’re more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven’t already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription: www.scotsman.com/subscriptions