UK Private Equity Annual Public Reports

Highlights from this year’s PERG reports

• Walker portfolio companies did not achieve a similar level of good additional disclosure in their audited financial statements this year, with only 43% doing so to at least a good standard and the remaining 57% doing so to a basic standard. (2023: 60%). However there were a large number of annual reports that were very close to achieving ‘good’ overall, only missing out due to one area of disclosure.
• It was positive to note that the number of addendums required this year has significantly fallen this year (26% vs 52% in 2023), following the increase over the last two years.
• The quality of disclosure in respect of social, community and human rights issues remained unchanged compared to last year, although notably the quality and depth of the disclosures in relation to environmental matters has improved once again.
• All BVCA members in scope included information on their website about themselves, their investors and their portfolio companies.
• The vast majority of portfolio companies upheld their transparency requirements and published annual reports and mid-year updates in a timely manner (81% and 85% respectively).
• Walker portfolio companies slightly underperformed the public revenue company benchmarks at a revenue increase of 5.8% versus 6.1%.
• Capital productivity increase in Walker portfolio companies exceeds public company benchmarks at 9.2% versus 5.0% growth per annum (2023: 11.9% versus 1.0%).

Read the reports

Published 18 December 2024

Read the press release

Published 18 December 2024

Featured information

Invested for the long term

The average timeframe of private equity ownership of portfolio companies is 6.0 years and the current portfolio companies within scope of the Walker Guidelines have been owned for an average of 5.0 years.

Invested in people

The portfolio companies within scope of the Walker Guidelines are some of the largest businesses in the UK, employing over 522,000 employees across the country.

Private equity’s investment in employees typically increases both year on year and over the duration of private equity ownership. Average employment cost per head increased by 2.7% in 2023 compared with 2022, just below the long-term trend and the UK private sector benchmark of 2.1% growth over the same period.

Backing and building British businesses

Portfolio companies are collectively buying more than selling. 60% have made net bolt-on acquisitions whilst 15% have made net partial disposals.

Portfolio companies outperformed the public company benchmark on long term revenue on a reported basis.

There is a wide range of results in 2023 trading performance in the current portfolio companies at both a sector and company level, with the outperformance partly driven by the Consumer sector achieving higher growth in profitability (EBITDA) than other sectors.

Generating returns

Equity return from Walker portfolio company exits in the last 15 years is 3.0x the public company benchmark. Around 60% of the additional gross return can be explained from the higher levels of financial leverage employed, with the balance being private equity strategic and operational improvement.

Using debt to fund acquisitions

Across the total Walker portfolio, the debt ratio averaged 6.5x at the time of initial investment by the PE and 6.8x at the latest date or exit, indicating that while debt has grown under private equity ownership it is at a marginally higher rate to growth in profit.

By sector, debt has reduced under private equity ownership in the 3 of the 6 categories (see EY report for full details).

Debt levels applied to portfolio company investments are typically higher than public company benchmarks. 64% of portfolio companies have a debt-to-EBITDA ratio – a common measure of profit – above 5x, versus 11% of publicly listed companies.

Read the reports

Published 18 December 2024

Read the press release

Published 18 December 2024