The BVCA, in association with Ernst & Young, has published its third annual report on the performance of the largest UK companies owned by private equity firms as recommended by the Walker Guidelines for Disclosure and Transparency in Private Equity.
The report found that in aggregate: Private equity portfolio companies performed well in 2009, with positive year on year growth in revenue, profits, labour productivity and capital productivity - albeit at lower levels that seen in previous years' reports reflecting the recession in the UK and global economies. Private equity portfolio companies outperformed listed public companies and UK economy-wide benchmarks across a range of metrics in 2009. These include revenue, profits, employment, labour productivity and capital productivity. In particular:
Employment by portfolio companies in 2009 stood at 315,000, declining only -0.6% from 2009. This compares to a decline of -2.2% amongst sector-weighted FTSE equivalents, and -2.8% in the UK economy as a whole. Annual labour productivity growth at portfolio companies was 3.1%, significantly in excess of the UK economy of -2.7%; operating capital productivity grew by 8% versus a sector weighted FTSE benchmark of -0.4%.
Commenting on the report, Simon Walker, Chief Executive of the BVCA, said:
"It is clear from these figures that private equity has been affected by the global recession. However, relative to their listed equivalents and the UK economy as a whole, the industry has performed admirably. Whilst I believe the worst is behind us, there will be more challenges ahead. But what this latest report demonstrates is private equity's ability to perform well even in the harshest of economic climates. As we enter a new period of growth, I am confident that all the hard work of the last two to three years will ensure that private equity will play a crucial role in the economic recovery."
Harry Nicholson, Private Equity Partner who led the Ernst & Young team, added:
"In an extremely challenging year, the portfolio companies grew through continued improvement in labour and capital productivity. The findings in this report show that the performance of portfolio companies, in aggregate and across a wide range of measures, has not been adversely affected by higher financial leverage."
To view the full report, please click here
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Notes to editors:
The British Private Equity and Venture Capital Association (BVCA) is the industry body for the UK private equity and venture capital industry. The BVCA has over 450 member firms, representing the overwhelming number of UK-based private equity and venture capital firms and their advisers.
The BVCA, in association with Ernst & Young, has…
