Total UK private equity deal volumes last year were up 4.4% versus 2023

Total private equity investment in London increased in 2024, according to the latest UK Private Equity Review from KPMG UK.

The comprehensive annual study into private equity deal activity found that investment in the region grew by 10.5% in 2024, totalling £78.1 billion. The findings reflect a period in which the UK experienced a more stable economic climate, with interest rates and inflation falling; greater political certainty following elections; and a surge in transactions ahead of anticipated changes to Capital Gains Tax.

With deal volumes in London remaining stable, falling slightly from 757 to 753 year-on-year, average deal values improved.

Investment in London accounted for almost half (49.1%) of all new PE backing in the UK, delivering the greatest interest from PE funds, ahead of the North West (£20.0 billion) and the South East (£15.8 billion).

Helen Roxburgh, Partner and Head of KPMG’s London Region M&A team, said: “London remains a global leader for private equity investment, representing nearly half of the UK’s total PE backing. With deal volumes remaining strong, the capital continues to attract significant interest, highlighted by numerous multi-billion-pound investments.

“With further interest rate cuts likely to stimulate the market in 2025, we are anticipating another positive year as London continues to act as a hub for international investment across sectors.”

The national outlook

Total private equity investment activity in the UK increased through 2024. 1,699 transactions, with a total value of £158.9 billion were completed during 2024, which represents an almost 12% increase in deal values from 2023. The majority of deal activity took place in the second half of the year, with values increasing to their highest level since the first half of 2022.

Alex Hartley, Head of Corporate Finance at KPMG UK, said: “There are encouraging signs from the 2024 data that deal activity may have bottomed out in the UK in 2023, as we saw activity, both in volume and value, pick up last year. In particular, we saw significant activity in the second half of the year as many business owners tried to get ahead of expected changes to Capital Gains Tax.

“Given the current signals in the market around increased activity levels – alongside reducing inflation and interest rates and greater political certainty – there is cautious optimism that UK private equity deal activity will see further growth through 2025 and 2026.”

TMT sees greatest growth, while others punch above their weight

Business services dominated the private equity deal market, representing 43% of the total deals made in 2024, up more than 10% over the previous year. However, it was TMT which emerged as the hottest sector. Deal volumes were up nearly 19% year-on-year and cumulative values were up nearly 58% over the same period, capturing more than £40 billion in total deal value.

While deal volumes were both down in Financial Services and the Energy sectors, the value of those deals was greater than their sum. Financial services represented 11% of the deals, but 14.6% of the value, while energy represented 3% of the deals, but 4.7% of the overall value, indicating that they were both punching above their weight.

Another sector that saw a resurgence was Consumer Goods and Retail, with volumes up 5.3% to 138 and values up 21% to £10.7 billion, reflecting improving consumer confidence through the year.