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BVCA: Private Equity Propels U.K. Economy
At a time when the U.K. is considering making it easier for private equity firms to list in the kingdom, here comes a study that adds some oomph to such a move.
At a time when the U.K. is considering making it easier for private equity firms to list in the kingdom, here comes a study that adds some oomph to such a move. It turns out that private equity is a major and positive force in the U.K. economy, creating more jobs and attracting more foreign investment than companies backed by other means. According to the British Venture Capital Association, p.e.-backed companies added an average of 9% new jobs over the past five years, compared with 1% and 2% from FTSE 100 and FTSE Mid-250 Indexes companies, respectively. The BVCA notes about one in every five employees in the private sector in the U.K. works for a p.e-backed company. In other positive developments, private equity firms contributed a pretty pound to the countrys economy by accounting for 80% of the foreign investment. The BVCA found that p.e.-backed companies performed better than listed companies, with an average growth rate of 18% since 2000; in contrast, overall companies in the U.K. grew about 1.1% during that time period. Private equity is also good for the banking industry. Almost 30% of all U.K. investment banking fees from M&A and loan financing were derived from private equity backed transactions, the report stated. The news couldnt come at a better time as the U.K.s Financial Services Authority is planning the release of a consultation paper on the p.e. industry, similar to one already out on hedge funds.