• Swindon & Wiltshire Economy
• Thursday July 11 2024
• Author Name: Peter Davison

South West reflects equity deal slowdown as numbers revert to 2019 levels – British Business Bank

The number of equity deals in the South West involving SMEs fell by almost a quarter last year, returning to 2019 levels, according to a new report from the British Business Bank.

The region saw 117 equity deals completed in 2023, an annual decline of 23 per cent, according to the bank’s Small Business Equity Tracker.

By number of deals, the region was ranked third in England excluding London, after the South East and East of England.

The total equity investment value in the South West in 2023 fell by 67 per cent to £266 million.

A tighter macroeconomic environment and heightened interest rates continues both to affect the relative attractiveness of the asset class and hamper exit opportunities for UK companies,” said the bank.

However, equity investment for smaller businesses has remained at over £2 billion in each of the last five quarters, demonstrating some stability in the market.

While the equity market has seen two consecutive years of contraction, investment values have increased by 182 per cent over the last 10 years, with deal numbers 42 per cent higher.

Since 2014, more than 21,000 equity deals have been completed, collectively providing over £90 billion of equity finance to support the growth of innovative smaller businesses.

The bank said it hoped the South West Investment Fund will continue to drive sustainable economic growth by supporting innovation and creating local opportunity for new and growing businesses across the region.

Internationally, UK has overtaken India as the third largest venture capital (VC) market in the world, now accounting for 5.8 per cent of global investment as UK companies raised £72 billion between 2021 and 2023.

The UK has strengthened its international position over the past decade as its share of global VC investment has risen from 3.4 per cent in 2014-2016, the largest percentage point increase of any of the top 12 global markets.

Steve Conibear, UK network director, South West for the British Business Bank, said: “2023 was a tough year for the equity finance market, not just in the UK but globally, and the picture in the South West reflects that.

“But it’s encouraging that UK investment does now look to be stabilising and as we’ve seen with other regional funds, the Bank’s £200 million South West Investment Fund, launched last year, is an important addition to the regional equity funding landscape, supporting small business growth across the region.”