Scottish private equity activity cools from record high but 2024 showing ‘green shoots’

Latest figures also show the UK private equity market overall witnessed a more significant decline.

Graeme Williams, head of corporate finance M&A for Scotland, said it was always going to be tough to match the record breaking numbers of 2022.

Scotland’s private equity activity failed to build on 2022’s record breaking numbers after confirmation of a dip last year.

Publishing its latest mid-market private equity report, KPMG said 42 transactions took place in 2023 with an overall value of £3.3 billion. That compares with 51 deals amounting to a five-year high of £3.5bn in 2022.

Across the UK as a whole, 675 mid-market transactions were completed last year, representing a 10 per cent drop when compared to the 735 transactions completed in 2022. Meanwhile, the UK private equity market overall witnessed a more significant decline, with the total volume of deals down by about a fifth from 1,802 in 2022 to 1,451 in 2023. Mid-market private equity deals are defined as those with an enterprise value/deal value between £10 million and £300m.

Graeme Williams, head of corporate finance M&A for Scotland at KPMG, said: “It was always going to be tough to match the record breaking numbers of 2022 but, despite a slight dip, the figures in 2023 are cause for optimism in Scotland.

“2024 will be a year of upheaval and change, with a general election in the UK as well as major elections in the US and elsewhere on the horizon, and therefore the future is difficult to predict. This might mean a tough road ahead for the country and businesses in general, but I believe there are more than green shoots for firms of all shapes and sizes, with many facing an exciting future. It can only be hoped that we can overcome this period of instability and return to a more stable deals market during the coming 12 months.”

Meanwhile, new research suggests that private equity firms may see cash flow from North Sea assets fall 60 per cent below expectations in the case of a moderate energy transition. Financial think tank Carbon Tracker said many oil and gas companies are only taking into account existing climate pledges in their investments, assuming a slow energy transition. Its report warns that the energy transition is irreversible and accelerating falling demand will drive down commodity prices, and with it the cash flows and value of oil and gas companies.