PRIVATE equity investments into UK-based small- and medium-sized enterprises (SMEs) have been highlighted as a potential cure for market volatility, according to IW Capital’s chief executive and founder.
“Our investor base is as keen as ever before to fund the fantastic range of innovative small businesses that the UK has to offer,” said Luke Davis, chief executive and founder of IW Capital.
“And in terms of the desire to grow and raise funds as a business; we have seen record deal-flow and ambition as firms look to get on with business.”
Davis’ comments come amid ongoing global stock market turmoil. The FTSE 100 is now at a lower value than at the same time last year as Brexit negotiations continue and global politics create uncertainty.
Despite this, the last year or so has seen a positive trend in private equity investments in the UK and the rest of Europe, according to Davis.
He added that for businesses seeking to raise funds, going the private equity route can mean greater access to guidance and expertise, and is also more likely to lead to “valuations based upon reality rather than the hype that can be attached to funds or markets”.
Davis also highlighted the advantages of investing in privately held companies, including their independence from global markets. There are also other incentives, such as the tax perks that come with the enterprise investment scheme (EIS).
Earlier this year it was revealed that private equity investment into UK-based SMEs hit a record high, with £4.5bn invested in the first half of 2019, according to data from Beauhurst.
Investment flows into SMEs through private deals grew by 15 per cent against the second half of 2018, despite ongoing rhetoric around Brexit uncertainty.
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Last year also proved to be a bumper year for European SMEs with €80.6bn (£74.4bn) invested across 7,800 companies, IW said.
The volume of deals rose by 10 per cent since the previous half, with the majority of the increase at the seed stage.
There was also a 17 per cent increase in the number of growth stage deals with the average deal size rising from £16m to £17m, the company said.
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