The UK private equity industry is increasingly confident in the current business climate according to the latest Confidence and Attitudes Survey from the British Venture Capital Association.
The number of private equity investors who find the UK’s business climate favourable for investment has more than doubled in the last three months. And almost two-thirds (63%) expect even further improvement in the first quarter of 2004 – this is an increase in confidence compared to October 2003 (50%), June 2003 (37%) and March 2003 (14%). Only 1% of investors expect a decline in economic conditions over the next three months.
The general outlook for the performance of investee companies is also encouraging with two thirds (66%) of private equity investors predicting an improvement in the performance of their portfolios over the next three months. But little change is predicted for fund raising over the next three months. Over half predict it to stay the same, while 41% foresee it getting better.
Looking at the bigger picture, the general level of share prices on the stock exchange continues to be the most important external influence on business opportunities as ranked by the majority of respondents (52%), with interest rates coming a close second for 45% of BVCA members. One third of investors (33%) feel the sterling/dollar exchange rate is one of the biggest external influences in today’s climate, compared to only 4% three months ago.
John Mackie, chief executive of the British Venture Capital Association, said: “While our members continue to keep a close eye on external influences such as exchange rates, the performance of the stock exchange and interest rates, their confidence outlook for business opportunities this year means that the industry will continue to be a major contributor to the UK economy in 2004.”