Increase due in private investment, says survey

PRIVATE equity firms expect to see an increase in their investment activity in the region, according to a new survey.

PRIVATE equity firms expect to see an increase in their investment activity in the region, according to a new survey.

The research by BTG Corporate Finance questioned key investment executives about their views on market conditions in the North East, and trends for the year ahead.

BTG Corporate Finance partner Shawn Bone said: “It is great that private equity investment is anticipated to increase. It comes against a background of declining private equity investment, both nationally and in the region, over the past few years.

However, 36% of respondents said that they now expected their investment activity to increase in the region in the next 12 months.”

The survey of more than 50 mid-market private equity firms across the country was commissioned by the corporate finance specialists to assess the prospects for investment in the North East over the next 12 months.

The respondents expected to see a resurgence of other deals activity, with 79% expecting to see an increase in trade sales, and 64% of those questioned anticipating an increase in Institutional Buy-outs (IBOs) MBO and MBI activity throughout the UK in 2012.

“The pent-up demand for retirement sales and management deals that have been held back by the instability in the markets is still building.

“We are already starting to see business owners moderating their value expectations rather than wait for markets to recover, given the uncertainty involved.

“They are reassessing their options and expectations in the knowledge that selling in the short term will derive lower multiples than they would have realised prior to 2007. This trend is likely to drive private equity activity next year as buyer and seller price expectations begin to align,” said Mr Bone.

The North East also looks set to benefit from being home to many businesses in the sectors favoured by private equity at present, according to the survey.

“Investment activity is expected to increase in sectors such as manufacturing, energy and environment, and business services, all of which are generally predicted to improve ahead of the rest of the economy, and where attractive investment opportunities should become available in the next year,” added Bone.

 

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